Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

Oral Answers to Questions — WALES

Margam (Deep Mine)

Mr. Ray Powell: asked the Secretary of State for Wales what was the date of his most recent contact with the National Coal Board about the new deep mine at Margam.

The Secretary of State for Wales (Mr. Nicholas Edwards): Within the past week in discussion with the chairman of the board.

Mr. Powell: I am glad to hear that the Secretary of State has had discussions, because we initiated a debate on this matter on 14 December. I hope that, after three months, he will now start to do something about the new mine at Margam. There are presently 200, 000 people out of work in Wales. The development of the new mine at Margam would create 1, 000 jobs. What is the Secretary of State doing? Is he taking the advice of the Prime Minister's son and sitting on his backside? I might have used a four-lettered word. Is the Secretary of State sitting on his backside—

Mr. Speaker: Order. The hon. Gentleman has asked enough questions.

Mr. Edwards: The discussion that I had with the chairman of the National Coal Board in the past week was one of a number of discussions that I have had with him in recent months on this subject. The position is unchanged from the earlier statements that I have made on the matter. The chairman confirmed that this mine would involve a high capital cost and that, in the board's view, although it would produce an operating profit, it would make substantial losses after taking account of the cost of interest on the investment. The board is investigating all the options, including whether means might be found of reducing the interest cost, and it will keep the project under review in the light of the results of the investigations.

Mr. Garel-Jones: Does my right hon. Friend agree that the possibilities for investment in new mines depends to a great degree on the implementation of the closures envisaged in the "Plan for Coal"?

Mr. Edwards: There are a number of loss-making pits and important capital investment projects in existing pits of which we must take account if the board is to return to profit. The balancing of the various interests is a matter for the NCB.

Mr. John Morris: Will the Secretary of State encourage the Coal Board to proceed with this vital development? Is he aware that when I raised the matter with the previous Secretary of State for Energy, the right hon. Member for Guildford (Mr. Howell), some 18 months ago, I was told that it was a matter for the Coal Board?
Given the new confidence at the Port Talbot steel works, the market available to the steel industry generally and the prospect of lower interest rates that the Secretary of State has just mentioned, will he ensure that the Coal Board's financial ceilings are adequate for this important development in employment terms in South Wales?

Mr. Edwards: The right hon. and learned Gentleman will be aware that the NCB's investment programme is about the largest of the major European coal producers. The chairman has told me that, since the project was first considered, there has been a substantial decline in world


coking coal prices and in United Kingdom coking coal demand. The board must assess whether there will be a market for the coal produced at Margam if it goes ahead with the project.

Mr. Coleman: Setting aside the closure of collieries in Watford, does the right hon. Gentleman not understand that an announcement of early investment in and development at Margam would mean a great boost to the economy and job prospects in Wales?

Mr. Edwards: I understand the importance of the project, but, as it is a very high capital cost project, it would be wrong to press the NCB to go ahead against its judgment on the viability of that project, as that might prejudice other important investment in the industry.

Unemployment Statistics

Mr. Barry Jones: asked the Secretary of State for Wales by what percentage unemployment has increased in the Deeside travel-to-work area, Clwyd and Wales since May 1979.

Mr. Nicholas Edwards: Between May 1979 and February 1982 unemployment in the Deeside TTWA, Clwyd and Wales increased by 186.9 per cent., 113·9 per cent. and 110·6 per cent., respectively.

Mr. Jones: What urgent and decisive assistance will the right hon. Gentleman give to save the 120 jobs at Abbey Mill, Greenfield, bearing in mind that the management has invested £500, 000 in new machinery and that the shop floor has boosted productivity significantly? How safe are the remaining 250 jobs at the Flint (Deeside) Courtaulds mill, bearing in mind that this weekend a further devastating 59 redundancies were announced? Does the right hon. Gentleman accept that monetarism is hanging like a curse over North-East Wales and that we look to him to save our economy?

Mr. Edwards: The hon. Gentleman will be aware that that corner of North-East Wales gets the maximum possible financial assistance, and it is attracting some important new industrial development to the area.
I shall be having a meeting with the chairman and senior management of Courtaulds in the near future, at which I intend to discuss the prospects for the various Courtaulds plants.

Sir Anthony Meyer: Has the recent Budget of my right hon. and learned Friend the Chancellor of the Exchequer brought effective help to industry? Is my right hon. Friend aware of the calculation that the net value of this help to industry in Wales is in the neighbourhood of £50 million and in Clwyd is probably £8 million?

Mr. Edwards: I cannot confirm the accuracy of any specific figures as they may be broken down. What we have is the value of the industrial package to industry as a whole. However, I can confirm that it is substantial and that it may be consistent with the kind of figures that my hon. Friend spelt out.
The energy package, for example, will be of considerable importance to a large number of major Welsh employers.

Mr. Alec Jones: Do not these figures show the scale of disaster that has befallen Deeside, Clwyd and, indeed, the whole of Wales, where now we have one in six of our

people out of work? Is it Government policy ever to return to full employment? If so, when are we likely to get there, how many jobs are needed before we get there, and what is the Secretary of State doing about it?

Mr. Edwards: The right hon. Gentleman should know by now that to proclaim enormous reflationary packages, which is apparently the policy of the Labour Party, is not a sure road to future employment. We saw that in the record of the Labour Government. I do not underestimate the extent of what has happened in Clwyd, but we saw even more substantial percentage increases in unemployment in places such as Ebbw Vale during the period of the Labour Government. My right hon. and learned Friend the Chancellor of the Exchequer, in his recent Budget, has reinforced the important general economic factors that are beginning to take effect—the fall in world oil prices and lower interest rates.

Mr. Wigley: Does the Secretary of State accept the significance of what he said to the whole of North Wales? An increase of 186 per cent. in unemployment in Clwyd and the fact that it gets the maximum possible incentives for industry make it next to impossible to develop industry further west. The new road will not be completed until 1988–89. In the meantime, we need direct investment. Will the right hon. Gentleman look at the effects on Clwyd and the rest of North Wales and get something moving in that direction?

Mr. Edwards: It is because we recognise the problems of the remoter areas that we attach such enormous importance to our road programme, which we have maintained throughout the period of economic stringency, and why recently we set in motion a chain of road developments to improve communications to Gwynedd, including the most recent one for Anglesey, initiated only last week.

Pupil-teacher Ratios

Mr. Knox: asked the Secretary of State for Wales what was the pupil-teacher ratio in secondary schools in Wales at the most recent count; and how this compares with the ratio in 1978.

The Under-Secretary of State for Wales (Mr. Michael Roberts: The ratio was 16·6 to 1 in January 1981, compared with 16·9 to 1 in 1978.

Mr. Knox: Will my hon. Friend confirm that this improvement in the pupil-teacher ratio in secondary schools in Wales has occurred in all the counties of Wales?

Mr. Roberts: The ratio varies between LEA areas and reflects their circumstances and policies in the deployment of teachers. With one exception, where the level has remained the same, the pupil-teacher ratio in all Welsh counties has improved since 1978. In mid-Glamorgan, for example, it has improved from 17·1 to 16·8.

Mr. D. E. Thomas: Will the Minister now tell his hon. Friend the Member for Leek (Mr. Knox) and the House that other factors that influence Welsh education policy are just as important as the pupil-teacher ratio? I have in mind, for example, the per capita expenditure of each authority.

Mr. Roberts: The per capita expenditure, too, has improved. The hon. Gentleman is right about there being other important factors, though teachers must be regarded as the most important resource in the education service.

Secondary Pupils (Qualifications)

Mr. Garel-Jones: asked the Secretary of State for Wales if he will take further steps to encourage pupils at secondary schools in Wales to leave school with adequate qualifications.

Mr. Michael Roberts: We shall continue to encourage all those concerned with education to seek to improve the attainments of pupils, whether in public examinations or otherwise. As I said in the Welsh day debate, next week I intend to issue a discussion paper about the problems of under-achievement and related issues.

Mr. Garel-Jones: I am grateful to my hon. Friend for that helpful reply. When he considers all these matters, will he have uppermost in his mind the best deployment of resources and ensure that resources are deployed fairly between the rural and poorer parts of Wales and the urban areas?

Mr. Roberts: Expenditure per pupil in secondary schools is increasing in real terms. The planned figure for 1982–83 is £808 at 1980 survey prices, compared with £773 in 1978–79 on the same price basis. The very considerable resources available for education in Wales should be used to the best possible advantage. The publication of "Planning for Progress" is designed as a new start in the battle against under-achievement.

Mr. Geraint Howells: Can the hon. Gentleman assure this year's school leavers in Wales that he will find jobs for them within the next three years?

Mr. Roberts: No Minister concerned with education in Wales has ever been able to give that assurance, however desirable it might be.

Mr. Coleman: As a means of encouraging teenagers to stay on at school and take up courses in excess of 21 hours a week at colleges of further education in order to gain adequate and further qualifications, will the Minister seek to persuade the Government to change the rules for the payment of supplementary benefit so that these young people become eligible for such payments?

Mr. Roberts: I can make no statement on that matter today.

Mr. Hooson: As one factor in the lower number of Welsh children taking examinations appears to be the unwillingness of some of the teachers unions to have the same dates of examinations as those in England, will my hon. Friend look into the possibility of having talks with all the teachers unions to review this problem?

Mr. Roberts: The system of having separate dates for examinations in England is not, in my judgment, of any significant benefit to the children of England.

Electronics Firms

Sir Anthony Meyer: asked the Secretary of State for Wales how many non-British electronics firms have established manufacturing facilities in Wales; and how many have indicated to him their intention to do so.

Mr. Nicholas Edwards: I know of 12 such firms now operating in Wales. One is in the process of setting up. My Department is currently in discussion with other firms about the possibility of doing so.

Sir Anthony Meyer: Does my right hon. Friend agree that we need to attract such firms to Wales if we are to

avoid the errors of the past of being excessively reliant on out-of-date technologies? The importance of every factor which might attract such industries is vital, including an absolute assurance that this country will remain a member of the European Economic Community.

Mr. Edwards: I note the results of a recent American survey, which showed that some 60 per cent. of the electronics firms interviewed would find the United Kingdom either no longer suitable or less suitable than now as a base for European operations should we withdraw from the EEC.

Mr. Roy Hughes: Has the right hon. Gentleman yet been able to establish that Inmos, for example, expects to sell only 10 per cent. of its products in Europe, with a further 10 per cent. in Japan and 80 per cent. in the United States of America? Does he appreciate that the latter two countries already have tariff barriers? Does he not appreciate that Britain's real need at present is to have a free market in agricultural products if it is to remain competitive, because butter, for example, would then be 40p a pound cheaper in the shops?

Mr. Edwards: I am not sure how the price of butter arises from a question about electronics firms. However, I can tell the hon. Gentleman that Mitel, which provides an enormous number of new job opportunities for his constituents, would not have established itself in Gwent if it had not been for our membership of the European Community.

Mr. Roy Hughes: On a point of order, Mr. Speaker. Is it in order for the Secretary of State to refer to Mitel as being in my constituency when it is in Monmouth?

Mr. Speaker: Order. I remember that I made similar mistakes in the days when I sat on the Government Benches.

Mr. Wigley: How many of those 12 companies are indigenous Welsh companies? Does the Secretary of State agree that there is a need for more home-grown microelectronic concerns? Will he confirm that last year, of the 160 companies or concerns in Britain that received grants under the microelectronics schemes, only three were located in Wales?

Mr. Edwards: Mr. Speaker, perhaps I may comment on the point of order. I did not suggest that Mitel was in the constituency of the hon. Member for Newport (Mr. Hughes). I suggested that it would provide many job opportunities for his constituents. That is quite clear.
I confirm that the companies I listed were overseas companies. I can also tell the hon. Gentleman that in a speech that I made to the Development Corporation at a meeting in the House of Commons last week, I made the very point that he made about the importance of encouraging local electronics firms to set up and the essential interdependence of the growth of local firms with the arrival of overseas companies.

Mr. Alec Jones: Has the Secretary of State seen the figures published by the Financial Secretary to the Treasury showing that the net difference between receipts from the EEC and our payments into the EEC have from 1973 to 1981 cost Britain about £1 million a day? How many more manufacturing jobs could that have created in Britain and Wales?

Mr. Edwards: I do not believe that many manufacturing jobs would be created in Britain and Wales if we deprived ourselves of our largest and fastest growing markets.

Fourth Television Channel Authority

Mr. Geraint Howells: asked the Secretary of State for Wales, further to his intervention, Official Report,  25 February, column 1039, if he will make a statement on his discussions with the Independent Broadcasting Authority, the Welsh Fourth Channel Authority and Harlech Television.

Mr. Nicholas Edwards: My discussions were informal and enabled me to form a balanced picture of the considerable activity that is taking place in preparation for the launching of the new channel.

Mr. Howells: I am grateful to the Secretary of State for his reply. In view of what was said in the Chamber during the recent Welsh affairs debate, will he give an assurance to the people of Wales that everything is well and that the Welsh channel will be operating from the day that has been suggested in the autumn?

Mr. Edwards: The hon. Gentleman will be aware that I have no direct responsibility for broadcasting matters. However, I took the view that the intervention by the hon. Member for Pontypool (Mr. Abse) during the last Welsh day debate was a quite unjustified attack on the responsible members of the Welsh television channel authority. I thought that it was an attack that I should deplore immediately, as I did in an intervention. Recently, I have met not only members of the authority but senior representatives of HTV. I am certain that the authority is proceeding in a sensible way with these important negotiations to establish the new channel on a successful basis.

Dr. Roger Thomas: Has the right hon. Gentleman seen the press release issued on 1 March—the day of the inauguration of the fourth Welsh channel—regarding the independent producers, whose aims, apparently, are concerned with the culture, problems and aspirations of the Welsh nation? Will he comment on that, because many Welsh speakers do not agree with that summing up?

Mr. Edwards: I should have thought that it would be the wish of every hon. Member to further the culture and and aspirations of the Welsh nation. I find it utterly astonishing that the hon. Member for Carmarthen (Dr. Thomas) should wish to dissociate himself from such a worthy objective, just as I thought it deplorable that in the Welsh day debate he associated himself with quite unfounded accusations of some kind of gravy train being involved.

Employment (European Community Assistance)

Mr. Roy Hughes: asked the Secretary of State for Wales when he next contemplates meeting EEC Commissioners in Brussels to discuss employment in Wales.

Mr. Nicholas Edwards: I have no immediate plans for such discussions so soon after my visit in January.

Mr. Hughes: Is it not time that the right hon. Gentleman reminded the Commissioners that manufacturing jobs in Wales have dropped by a quarter during the past 10 years that we have been members of the Common Market? Will he also take into consideration the millions of pounds that we have paid to the Common Market in membership contributions? Does he agree that had that money been available to attract firms, we could have brought thousands of jobs to Wales?

Mr. Edwards: As I have already pointed out, there would be no way of attracting jobs if we could not provide markets. The EEC provides by far the most substantial market. It is astonishing that the hon. Gentleman, whose constituency will benefit most from our membership, should take that line at a time when the British steel industry is utterly dependent on the coherent and cohesive steel policy now being followed in Europe and when important firms such as Mitel are establishing themselves close by.

Sir Anthony Meyer: Will my right hon. Friend explain to the hon. Member for Newport (Mr. Hughes) a few elementary facts about Britain's overseas trade: that we have always been in deficit with other manufacturing areas with which we have traded; that our coverage of imports by exports is better with the EEC than with either the United States or Japan; and that to conduct trade on a purely bilateral basis is no kind of policy for a country such as ours which is dependent on world trade?

Mr. Edwards: I entirely agree with my hon. Friend. One of the most encouraging and striking features of the past several years has been the improvement in our export performance with countries in Western Europe.

Mr. Rowlands: The right hon. Gentleman cannot possibly agree with the inaccuracies of the hon. Member for Flint, West (Sir A. Meyer). Has his Department estimated the loss of manufacturing jobs in Wales as a result of the large manufacturing deficit between the EEC and the United Kingdom in the last two years? Will he put a figure on that for Wales? My constituency has certainly lost jobs as a result of those manufacturing imports, and it has 300, 000 sq. ft. of empty factory space to show for it.

Mr. Edwards: There is no evidence for the view that Hoover's lack of competitiveness can be attributed to the Common Market. Indeed, it is likely that we would still have faced severe competition from Europe had we remained outside the Market, without the opportunities that membership provides. The people of Wales should note the concerted hostility of the official Opposition to membership of the EEC, which provides the best opportunity there is for new job creation in Wales.

Council House Sales

Mr. Delwyn Williams: asked the Secretary of State for Wales how many public sector tenants had completed the puchase of their homes by 31 December 1981 under the provisons of the Housing Act 1980; and how many offer notices have now been issued.

The Under-Secretary of State for Wales (Mr. Wyn Roberts): A total of 8, 086 sales had been completed by 31 December 1981, against 26, 188 offer notices issued.

Mr. Williams: Does my hon. Friend recognise the fact that almost 56 per cent. of the people of Britain now own


their own houses, which is a great step towards a property-owing democracy? [HON. MEMBERS: "Reading."] I compliment my hon. Friend on the efforts of the Welsh people to that end, but will he now confirm completion dates for those properties—[HON. MEMBERS: "Reading."]—that had notice served on them prior to 3 April 1981? When will they now be completed?

Mr. Roberts: I am grateful to my hon. Friend for his compliments. The sale of council houses has been a great success in Wales. As to his request that we should fix a date for completions, he will know that that is very much under consideration.

Mr. D. E. Thomas: On a point of order, Mr. Speaker. Is it in order for the hon. Member for Montgomery (Mr. Williams) to read from a piece of paper recently handed to him by the hon. Member for Anglesey (Mr. Best)?

Mr. Speaker: The hon. Gentleman was raising his eyes a great deal.

Mr. Hooson: Will my hon. Friend publish a league table on the performance of the various district councils in respect of the sale of council houses, and in particular the average completion time for each district council?

Mr. Roberts: We publish lists of local authorities, which are placed in the Library, which give an analysis of their position on council house sales.

Mr. Alec Jones: If the hon. Gentleman is so concerned about the completion time for the sale of council houses, why is he not equally concerned about the time that it will take for the 25, 000 people in Wales who are waiting for council houses to get the chance of having homes of their own?

Mr. Roberts: I am concerned about waiting lists. I have more than once stressed in the House that local authorities that have benefited through capital receipts from council house sales should apply those receipts to increasing housing provision.

Mid-Wales (Aid)

Mr. Hooson: asked the Secretary of State for Wales when he expects to announce the result of the review of the status of Mid-Wales for regional development aid.

Mr. Nicholas Edwards: The future status of parts of Mid-Wales forms part of a wider review of assisted areas throughout the United Kingdom. My right hon. Friend the Secretary of State for Industry, whose responsibility this is, hopes to announce the results of the review some time in the next two or three months.

Mr. Hooson: In playing his part in the review, will my right hon. Friend underline the fact that the problems of rural sparsity in Mid-Wales are unique in all of England and Wales? Will he also emphasise the conviction of the Development Board for Rural Wales that the continued effectiveness of that successful body would be gravely undermined if Mid-Wales did not retain some sort of development status?

Mr. Edwards: There are problems of rural depopulation and sparsity in a number of other places in the United Kingdom. However, I confirm that those are factors that should properly be taken into account in the

review and that we shall be seeking to develop policies that properly take account of them. I assure my hon. Friend that those matters are very much in our mind.

Mr. D. E. Thomas: Will the Secretary of State assure the House that his right hon. Friend the Secretary of State for Industry will take into account the ratio of manufacturing jobs in each region? Does he accept that removing assisted area status from the area covered by the board would severely undermine its operations?

Mr. Edwards: I assure the hon. Gentleman that we take all such factors into account. I entirely appreciate the need to maintain effective incentives to encourage the sort of policies that have had such success in the past year or two.

Dr. Roger Thomas: Will the right hon. Gentleman bring to a speedy end the present situation whereby there are two types of status for rural areas in Wales—one status within the DBRW and another locked into a disadvantage outside the board?

Mr. Edwards: As the hon. Gentleman knows, that situation was created by his right hon. and learned Friend the Member for Aberavon (Mr. Morris), and I have no immediate plans to change it.

Prince of Wales Orthopaedic Hospital, Rhydlafar

Mr. Ioan Evans: asked the Secretary of State for Wales what representations he has received regarding the threatened closure of the Prince of Wales orthopaedic hospital, Rhydlafar.

Mr. Wyn Roberts: We have received 86 representations and a petition of more than 170, 000 signatures, which was presented to the Welsh Office last Wednesday by a deputation of which the hon. Gentleman was a member.

Mr. Evans: There were actually more than 180, 000 signatures and they demonstrate the very strong feelings in Wales. Has the hon. Gentleman seen the letter in today's Western Mail from Mr. Meurig Williams, who has done pioneering work on spinal injuries? Will the hon. Gentleman reject the claim of the South Glamorgan health authority that one reason why the hospital is to be closed is the failure to recruit nurses? There were 200 applications for seven jobs at the hospital.

Mr. Roberts: I ought to make the position clear. No decision has been taken on the future of the hospital. The South Glamorgan health authority has approved closure in principle. There are consultations involving the Mid-Glamorgan and Gwent area health authorities and those consultations will finish at the end of this month. Of course, the consultations involve proposals for alternative services for orthopaedic patients, which would result in an additional 42 beds. The health authorities will obviously consult further after the end of the consultation period and will, or will not, make proposals to my right hon. Friend the Secretary of State.

Mr. Kinnock: Are not the health authorities, including South Glamorgan, making decisions and even going to consultation under the duress of severe cuts in resources for the Health Service in Wales, which make them offer the option of the closure of a hospital which, in other circumstances, they would not want to close?

Mr. Roberts: I must disillusion the hon. Gentleman. He has forgotten that the Welsh Office offered £800, 000 to South Glamorgan in 1980, and that offer has not been taken up. I also remind the hon. Gentleman of what I said earlier. The consultative proposals under discussion involve an increase of 42 beds.

Mr. Coleman: Does the hon. Gentleman recognise that the reason for the public concern over the proposed closure of Rhydlafar is the renown of the hospital, because of the work done both on the present site and, formerly, in Richmond Road, Cardiff? Will he undertake to explore every avenue to ensure that the necessary finance is made available to keep the hospital in being—it is clear from his previous answer that he has given some consideration to the matter—so that the specialist treatment that the hospital has given over the years, especially to children, continues, thus avoiding the long waiting lists in orthopaedic wards in other parts of Wales?

Mr. Roberts: I fully appreciate the affection in which the hospital and its staff are held by the people whom they serve in South Wales. My right hon. Friend has an open mind about the future of the hospital and I am sure that he will take every aspect into consideration.

Water Abstractions (Payment)

Mr. Wigley: asked the Secretary of State for Wales what is the total payment expected to be made during 1981–82 by the Severn-Trent water authority and the North-West water authority, respectively, to the Welsh water authority in relation to the water they abstract from Wales.

Mr. Wyn Roberts: In 1981–82, sums of £1, 340, 000 and £323, 700 were payable respectively by the Severn-Trent water authority and the North-West water authority in respect of bulk supplies of water from Wales. A further £203, 000 and £2, 301, 300 were payable respectively by those authorities in respect of bulk supplies from the English parts of the WWA's area.

Mr. Wigley: Does the Under-Secretary accept that those are wholly derisory payments for the water taken from Wales and amount to only about 1 per cent. of the WWA's turnover? Does he accept that a payment of, say, 25p per 1, 000 gallons would give Wales an income of £40 million, which would be enough to bring down the water rates in Wales by between 20 and 40 per cent? What is the latest position on the proposal for increased payments, put to the Welsh Office by the WWA in October?

Mr. Roberts: I do not regard those millions of pounds as derisory and I am sure that the WWA does not. There is a dispute between the Welsh authority and the Severn-Trent and North-West authorities. We were notified of that in September last year and as it was the first reference to my right hon. Friends under the legislation we were naturally anxious to agree the correct procedure for dealing with it. A memorandum of principles and procedure was sent to the water authorities concerned on 16 February and the Welsh authority was asked to submit its representations by 16 March. We have not received those representations, but we are still hopeful that the decision will be made in May.

Mr. Stokes: Is my hon. Friend aware that my constituents in Halesowen and Stourbridge are customers

of the Severn-Trent water authority and that I receive many complaints about its high charges? Will he therefore please ensure that no representations from the hon. Member for Caernarvon (Mr. Wigley) have any effect in increasing those charges?

Mr. Roberts: All such factors will have to be taken into account by my right hon. Friend. It is as well to point out that, on the basis of combined average domestic bills for the coming year, Wales is about third in the league table of water authority charges in England and Wales.

Mr. Alec Jones: Does not the Minister realise that the transfer of water from one water authority to another on a no-profit, no-loss basis can be justified only so long as there is no wide disparity between the charges levied by those water authorities? If the Labour Government's Water Charges Equalisation Act 1977 was defective, which I dispute, why did not the Government either improve or modify the Act rather than abandon it and thereby cost the Welsh water authority at least £3 million a year?

Mr. Roberts: The right hon. Gentleman must really get this matter into perspective. The amount obtained by the water authority from equalisation was a decreasing amount. The effect of the Act was eccentric. It drove an increasing number, 42 per cent. in all, away from the median of charges. I know of no other system that does not have this kind of perverse effect.

Mr. Wigley: On a point of Order, Mr. Speaker. In view of the unsatisfactory nature of that reply, I shall continue to seek to raise this matter on the Adjournment.

House Improvement Grants

Mr. Grist: asked the Secretary of State for Wales if he will give the total estimated number of house improvement grants made in Wales during the current financial year.

Mr. Wyn Roberts: It is estimated that some 5, 200 house improvement grants of all categories were made by Welsh local authorities between 1 April and 31 December 1981. Following the Chancellor's statement last week, I expect the number of grants to go up significantly as householders take advantage of the 90 per cent. maximum rate of grant for the limited period to 31 December 1982.

Mr. Grist: Will my hon. Friend make sure that people are aware of the dates between which these new grants apply? Is he able to say how much of the money involved is coming to Wales?

Mr. Roberts: With regard to the latter part of my hon. Friend's question, the Welsh share of the sum to which the Chancellor referred is £4·8 million. We shall make every effort to publicise the availability of these grants.

Mr. Wigley: Does the Minister accept that the increase in the percentage ceiling on grants is not much good if local authorities lack the funds to pay discretionary grants? This has been the case, in many instances, in the last year in Wales. How will the Minister ensure that there are adequate funds to enable authorities to meet requests when they are received?

Mr. Roberts: The hon. Gentleman will have heard me refer to the capital receipts available to local authorities from council house sales. Welsh local authorities are likely


to show an underspend on their total housing budget in the current year. So there is money available. I exhort local authorities, particularly those that may not have been paying up to the maximum percentage of the grant available, to do so forthwith.

Mr. Alec Jones: Will the Minister consult his colleagues and reconsider the decision to set an end date for the 90 per cent. grant? I am sure that the Department can provide figures to bear out my recollection that when the grant was last increased to 75 per cent. an unfortunate by-product was the large number of cowboy builders who came into Wales, with the result that some very poor improvement work was carried out.

Mr. Roberts: We are anxious to give an immediate boost. That is what the increase in grant percentage has done. I must remind the right hon. Gentleman that it is all very well pressing for a continuation of the 90 per cent. grant—it is a considerable percentage—but we must live within what the country can afford.

Development Board for Rural Wales

Mr. D. E. Thomas: asked the Secretary of State for Wales when he last met the chairperson of the Development Board for Rural Wales to discuss industrial investment in Mid-Wales.

Mr. Nicholas Edwards: I met Mr. Leslie Morgan on 22 December 1981, in the context of the board's expenditure proposals for 1982–83.

Mr. Thomas: Will the Secretary of State say whether he was able to show Mr. Morgan that there will be no reduction in the board's budget for next year in real terms?

Mr. Edwards: I have decided on a budget allocation to the board in 1982–83 of £11·4 million gross. This will enable the board to maintain its expenditure at around the same levels as previously planned and will facilitate further job creation.

Mr. Hooson: As my right hon. Friend has credited the DBRW with the creation of 600 jobs in Mid-Wales in its first four years, will he confirm that this has been a remarkably cost-effective exercise, demonstrating the importance of continued intermediate aid status for Mid-Wales and the continuation of the DBRW?

Mr. Edwards: I do not think that I can add to what I have already told my hon. Friend on that subject.

Mr. Geraint Howells: All hon. Members are aware of the excellent work done by the Development Board for Rural Wales. However, can the Secretary of State explain why there is 25 per cent. unemployment in some parts of the development board's area in Mid-Wales?

Mr. Edwards: I think the hon. Gentleman is well aware that certain towns have a record of high unemployment going back over many years. Some of the tourist centres especially tend to have an unemployment level that fluctuates considerably. The DBRW is concentrating on certain growth areas. It has proved remarkably successful, notably in the first two months of this year, in attracting fresh investment. The overall level of unemployment in the board's area is a good deal lower than in many parts of the United Kingdom.

Oral Answers to Questions — CHURCH COMMISSIONERS

Churches (Opening)

Mr. Greenway: asked the hon. Member for Wokingham, as representing the Church Commissioners, what guidance is given to incumbents as to the desirability of opening their churches.

Sir William van Straubenzee (The Second Church Estates Commissioner, Representing Church Commissioners): None, Sir, because this does not fall within the responsibility of the Church Commissioners. It is for the incumbent and parochial church council to take a decision as to whether and for how long its church should be open to the public.

Mr. Greenway: I recognise that the Church Commissioners have no responsibility in this area. Does my hon. Friend share my deep concern that most churches are permanently locked against the vandal and the thief, thus depriving ordinary people of entrance to them? Does he not consider that it would be a good idea if suitable people offered their services to vicars and incumbents as church watchers, who would guard churches for certain periods during the day? This would enable churches to be open and so permit all citizens to use them for the purposes of the soul.

Sir William van Straubenzee: I am grateful to my hon. Friend for his understanding of the limitations of the responsibilities of the Church Commissioners. As an individual, I share his anxiety. This, alas, is a factor of our present life that extends far beyond churches. But churches are a good example of the problem of leaving premises unattended.

Mr. Robert Atkins: I wish to support my hon. Friend the Member for Ealing, North (Mr. Greenway) in his request for keeping open churches. I spend what little spare time is available to me visiting churches. Is my hon. Friend aware to what extent vandalism and hooliganism within churches is increasing or decreasing?

Sir William van Straubenzee: I am afraid that I have no statistics that I can give my hon. Friend. I thought the original suggestion of voluntary wardens was helpful. I hope that it will attract publicity. I share the anxiety expressed by hon. Friend the Member for Preston, North (Mr. Atkins). I think he will find that a note will be found in most well-run churches explaining where the key can be obtained on application.

Mr. J. Enoch Powell: Does the hon. Gentleman agree that this problem is by no means new, as the number of watching chambers dating from the Middle Ages bears witness? Is he aware that the solution suggested by the hon. Member for Ealing, North (Mr. Greenway) deserves wide adoption? Does he agree that when it is not possible to have a roster for watching, a roster for ensuring that a means of opening churches is available would be second best?

Sir William van Straubenzee: The right hon. Gentleman makes an extremely helpful comment. It is a fact, I suggest, that in former years we were somewhat more robust in dealing with those who were discovered doing these things. We shall, perhaps, have to reconsider this aspect of the matter.

Oral Answers to Questions — INDUSTRY

Plessey Ltd.

Mr. Dalyell: asked the Secretary of State for Industry, pursuant to his reply to the question of the hon. Member for West Lothian on 15 February, Official Report,  column 14, what discussions there have been with Plessey and the management group that is seeking to buy part of the Bathgate business from Plessey.

The Under-Secretary of State for Industry (Mr. John Wakeham): The Scottish Office and the Department of Industry have been in touch with Plessey on the situation at Bathgate, and the Scottish Office has had discussions with the management group.

Mr. Dalyell: Does the hon. Gentleman think that the Arcotetronics offer of 80 jobs is genuine?

Mr. Wakeham: My Department and the Scottish Office are well aware of the overseas company's interest, which is, in our view, serious. It is possible that the company will be asking more formally about what support is available from our Department.

Transtel Telex Teleprinter

Mr. Neale: asked the Secretary of State for Industry when he expects to license Transtel telex teleprinters for independent private sector supply from July 1982 in accordance with the provisions of the British Telecommunications Act 1981; and if he will make a statement.

Mr. Wakeham: My hon. Friend announced on 16 November that the target for liberalising the supply of telex teleprinters is October 1982. The necessary standards are being written and I hope that they will be completed, published and approved by October so that the independent approvals body can begin testing equipment for private sale.
Three kinds of telex teleprinter have already been evaluated by BT and are being supplied by BT to the public. I am actively exploring possible arrangements under which all manufacturers, including Transtel Telecommunications Ltd., might be given freedom to supply the same equipment direct to the public prior to October and possibly before July 1982. The issue is complicated by BT's plans to modify the telex network, which will make it necessary to alter existing telex teleprinters. I hope to announce a decision soon.

Mr. Neale: I thank my hon. Friend for that reply and congratulate him on the enthusiastic way in which he is seeking to liberalise BT's monopoly. Is my hon. Friend aware that BT has technical reservations about private sector maintenance of telex teleprinters? Will he examine the situation in the United States, where the public network operator has the right, with the agreement of the private sector maintenance companies, to uninhibited access to these machines? May I draw my hon. Friend's attention to his comment on technical changes in telex exchanges? Does he agree that the development in telecommunications on exchanges and in attachments has been evolutionary? Does he agree that if the development of one had not depended on the mutation in another, we would not have got very far?

Mr. Speaker: Order. We have taken longer on this question than we took on the previous three questions.

Mr. Wakeham: I shall be brief, because my hon. Friend's questions are so technical. I understand that BT does not have the powers that exist in the United States. I have no doubt that we shall reach a satisfactory conclusion on the matter.

Oral Answers to Questions — EDUCATION AND SCIENCE

The Arts (Report)

Mr. Christopher Price: asked the Secretary of State for Education and Science if he is now in a position to reply to the Education, Science and Art Committee's report on "Public and Private Funding of the Arts" an interim report on works of art, their retention in Great Britain and their acquisition by public bodies.

The Minister for the Arts (Mr. Paul Channon): I hope to publish the reply before Easter.

Mr. Price: Is the Minister aware that it is nearly a year since the report was put before him? Does he intend that his reply before Easter will be taken into account in this year's Finance Bill, and that action will be taken this year on the terms of his reply? Does he agree that the matter is urgent, since petty bureaucrats in the Treasury should not be allowed to stand in the way—as we found in our Committee—of the sensible retention of works of art in Britain?

Mr. Channon: The Treasury has been its usual helpful self on this, as in many other matters. I shall not anticipate the reply, which will be with the House before long.

Mr. J. Enoch Powell: Does the report concern the export of works of art from the United Kingdom, or exclusively from Great Britain?

Mr. Channon: Except in the most tangential way the report is not concerned with the export of works of art.

Mr. Cormack: Is my right hon. Friend aware that the report, which was unanimous, was given further unanimous backing in the debate in the House on 15 February? Is my right hon. Friend further aware that if a flood of works of art comes on to the market in the next year the admirable national heritage memorial fund will be unable to cope? Does he agree that unless some of the proposals in the report are adopted by the Government we could face a disaster that would make Mentmore appear to be a tiny local incident?

Mr. Channon: I hope that that will not happen. I am well aware that the report is unanimous. That fact has been brought to my attention on more than one occasion. Hon. Members have also brought it to the attention of my right hon. and hon. Friends. We shall do the best that we can. I am well aware of the views of the House.

Mr. Dalyell: If the Treasury has been its usual helpful self, does that mean that we must blame the Minister for the Arts for having taken so long?

Mr. Channon: The Government as a whole must take responsibility for the timing and content of replies to Select Committees. We have just had a parliamentary debate, which has to be studied by a number of Departments. I hope that the reply will not be long in coming.

British Library

Mr. Peter Bottomley: asked the Secretary of State for Education and Science what progress is being made on the construction of the new British Library.

Mr. Channon: The first contract for work on the new British Library building was awarded last month. The contractors plan to begin work on the site immediately after Easter.

Mr. Bottomley: Is my right hon. Friend aware that his reply will be welcomed by enthusiasts of the project? When does he expect the first phase to be completed?

Mr. Channon: The phases are divided into many separate sub-phases and groupings. After the preliminary work we shall start phase 1A(a) in the autumn. That will cost about £88 million and will take several years to complete. The process is long and complicated, but we are pressing ahead as rapidly as possible.

Mr. Dalyell: Does the Minister agree with the estimate of £600 million over a 10-year period?

Mr. Channon: No, I do not think that I agree with that. The project is enormously complicated and expensive. It will have to be revised from time to time as circumstances change. "One step enough for me" should be our motto. This is sensible and has met with general approval throughout the House.

Mr. Viggers: As far as the building itself is concerned, did my right hon. Friend notice the comment of a critic, prompted by the buildings at the National Theatre and the Barbican who said "When I hear the word 'culture' I call for my concrete-mixer". Can my right hon. Friend explain why it is necessary for the cultural muses to be pursued in buildings of such spectacular ugliness?

Mr. Channon: If my hon. Friend lives long enough to see the British Library completed, I hope that he will not think that it is a building of spectacular ugliness. I think that it will be quite a nice building. It is extraordinary that Britain has not made a start on building a new library before. We are way behind the Library of Congress, for example. It is generally recognised to be of great importance.

Arts Council (Appointments)

Mr. Dormand: asked the Secretary of State for Education and Science what proposals he has to make appointments to the Arts Council from persons living in the Northern region.

Mr. Channon: I am always ready to consider the appointment of persons with suitable qualifications and experience, wherever they live. But members are not appointed in a representative capacity or by virtue of their residence in a particular region.

Mr. Dormand: I accept that there is a case for non-regional appointments to the Arts Council, but is there not equally a case for regional appointees? Would not a mixture be advantageous to the arts and the Arts Council generally? Is the Minister aware of the strong feeling in the North of England that we are as neglected in the arts by this Government as we are in industry? Will the Minister reconsider appointing people from the North, particularly since no one from the Northern region has ever sat on the Arts Council?

Mr. Channon: On a rough calculation, out of the 18 members of the Arts Council, plus the chairman, no fewer than eight live outside London. Manchester, Liverpool, Leeds, Dorset, Scotland and Wales have representatives. The council contains many members from outside London. I cannot guarantee to appoint a person from a specific area. I am astonished that the hon. Gentleman should say that the North has been neglected. The Northern Arts Association receives more money than any other regional arts association in England.

Sir William Elliott: Does my right hon. Friend agree that it is harmful to the region, with its various problems, to suggest that it is neglected in terms of the arts? Is my right hon. Friend aware that currently the Royal Shakespeare Company is appearing at our theatre in Newcastle—the capital of the North—and that the Oslo Philharmonic Orchestra, appearing at the city hall, is playing to a highly appreciative audience? Is he aware that the Laing art gallery in Newcastle upon Tyne has a national and international reputation?

Mr. Channon: That shows that the North does well in the arts. The hon. Member for Easington (Mr. Dormand) grossly exaggerates his case.

Mr. Christopher Price: Is the Minister aware that Dr. Richard Hoggart, who was born and brought up in Leeds—which is in the North of England—has just been sacked?

Mr. Channon: I do not think that Leeds is covered by the term "Northern region". If we are to bandy names, I must tell the House that the secretary general of the Arts Council comes from Yorkshire and the deputy secretary general from Durham.

Information Services

Mr. Greenway: asked the Secretary of State for Education and Science what steps he is taking to increase the effectiveness of the information services for which he is responsible.

Mr. Channon: My advisory council on library and information services has recently published a report on future developments in this field. A copy is available in the Library. The report makes many valuable recommendations, and my Office is pursuing with those concerned the most urgent tasks identified by the council.

Mr. Greenway: Does my right hon. Friend agree that information services are vitally important as part of the library services? May we have an assurance that up-to-date information technology will be included in future? Will my right hon. Friend keep in touch with the Minister for Industry and Information Technology about the matter?

Mr. Channon: Yes. I am in constant touch with him. I entirely agree with all the points made in my hon. Friend's supplementary question and I can assure him that library authorities are well aware of those facts

Mr. Freud: I realise that the Minister is not responsible for the Department of Trade information service. However, will he try to persuade the Secretary of State to give him details of licences for the export of works of art, which at the moment it appears to be against Government policy to publish?

Mr. Channon: I shall certainly have a look at that point in conjuncton with my right hon. Friend.

Mr. Dalyell: Are significant sums being earmarked for information services to small firms?

Mr. Channon: A lot is happening concerning information services to small firms. I cannot say that specific funds are being allocated, but, as a result of studies that have been made in this field and others, small firms are well aware of the importance of the service and are taking it seriously.

Questions to Ministers

Mr. Patrick Cormack: On a point of order, Mr. Speaker. May I ask for your guidance? The word "chairperson" was used in question 13 today. May I ask you to instruct the Table Office not to accept that abomination and abortion of the English

language? Will you also give an assurance to the House that any future occupant of your Chair of the fair sex, will—like the late Miss Betty Harvie Anderson, who chaired our proceedings with such distinction and charm—be referred to as Deputy Speaker, Speaker, or Chairman of Ways and Means?

Mr. Speaker: Order, I hope that nobody will ever refer to me as "Chairperson". I shall look at what the hon. Gentleman has said. I share his lack of enthusiasm for that word.

STATUTORY INSTRUMENTS &amp;c.

Ordered, 
That the draft European Communities (Definition of Treaties) (International Railway Tariffs Agreements) Order 1982 be referred to a Standing Committee on Statutory Instruments &amp;c.—[Mr. Cope.]

Orders of the Day — WAYS AND MEANS

Order read for resuming adjourned debate on Question [9 March].

AMENDMENT OF THE LAW

Motion made, and Question proposed, 
That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of—

(a) any amendment with respect to value added tax so as to provide—

(i) for zero-rating or exempting any supply;
(ii) for refunding any amount of tax;
(iii) for varying the rate of that tax otherwise than in relation to all supplies and importations; or
(iv) for any relief other than relief applying to goods of whatever description or services of whatever description; or

(b) any amendment relating to the surcharge imposed by the National Insurance Surcharge Act 1976 and applying to some only of the persons by or in respect of whom the surcharge is payable.—[Sir Geoffrey Howe.]

Question again proposed.

Orders of the Day — Budget Resolutions and Economic Situation

[Relevant European Community documents: Document No. 10077/81 and the annual report on the economic situation in the Community (1981) and the economic policy guidelines for 1982.]

3 33pm

The Secretary of State for Industry (Mr. Patrick Jenkin): It is tempting at this stage in the Budget debate, on a Budget that has been widely welcomed as a Budget for industry, to rehearse again in detail the many valuable measures that my right hon. and learned Friend the Chancellor of the Exchequer announced on Tuesday. However, if I did that the House would quickly become bored and there would not be time for me to make several other important points.
I should like to comment on a few of the measures that were introduced for the benefit of industry. The total measures that have been directed to help industry will cost over £1 billion in 1982–3 and over £1·25 billion in a full year. It is significant to note that that approaches three quarters of the full PSBR effect of the whole Budget in the coming year.
First and foremost, there has been a warm welcome for the reduction in national insurance surcharge. NIS is a tax on jobs. The right hon. Member for Stepney and Poplar (Mr. Shore) was remarkably coy on Wednesday in confessing his party's responsibility for introducing that tax on jobs, and, indeed, for increasing it. By contrast, not only has the Government made a start on cutting that tax on jobs; that cut comes after two years in which there has been no increase at all in the employers' rate of national insurance contribution.
Help with energy is estimated to cost about £160 million in 1982–3. The new tariff arrangement for the largest electricity users will be of particular value. The House should know that that proposal emerged directly

from intensive studies by the National Economic Development Council task force—an indication of the value of that body.
At the beginning of last year the task force clearly established across a wide spectrum that British industry was paying more for its energy than many of its competitors. Therefore, last year my right hon. and learned Friend announced a number of measures, including a freeze on renewal prices for industrial gas, the coal-fired boiler scheme and help with electricity costs.
Partly as a result of those measures, and partly as a result of the fall in the exchange rate, an update of the NEDC task force's report in the autumn showed that energy prices were not generally out of line by then. However, there still remained a substantial discrepancy on electricity costs for high load factor users.
The House will recall that my right hon. Friend the then Secretary of State for Energy had asked the Electricity Council to have another look at the bulk supply tariff. The Council concluded that the present structure of the bulk supply tariff should remain broadly intact, but it raised the possibility of new load management terms for large industrial consumers. We are still studying the review and industry has been invited to comment, but we have now approved the new load management terms. These will bring valuable help to large electricity users who can reduce demand at relatively short notice during peak periods.
The scheme will not remove altogether the price disparity against overseas competitors, because our dependence on coal for electricity generation contrasts markedly with the greater use of nuclear power in some other countries. France has made much more progress than we have in switching to nuclear—nearly 50 per cent of France's total electricity now comes from this relatively cheaper source.
Perhaps those Labour Members who support the "No Nukes" campaign should realise that they are, in effect, advocating higher unemployment, because high energy costs lose British industry competitiveness, lose customers, and therefore cost jobs. It is of the utmost importance that Britain, like its major competitors, should move rapidly to increase the amount of electricity coming from nuclear power.
In addition to the new load management tariff, the Government are continuing the other arrangements on electricity prices announced last year. They are freezing gas prices for large users, freezing list prices for foundry coke, and extending the coal conversion scheme to cover conversion from gas and to include furnaces, ovens, kilns and driers as well as boilers.
Along with NIS and local rates, energy prices have been one of the main sources of complaint from industry. The Budget offers valuable help at a critical time.
The help for the construction industry has been widely welcomed, and I single out one item for particular mention—the industrial buildings allowance. The 100 per cent. allowance for small workshops has proved strikingly successful. Over 5, 000 new units have been created since 1980. Shortages still remain in some areas, particularly for very small workshops, and the House will welcome my right hon. and learned Friend's decision to extend the scheme in two ways. First, the 100 per cent. allowance will continue until 1985 for workshops of 1, 250 sq. ft. and below. Secondly—I know that this will be of particular help—the industrial buildings allowance as a whole will


be clarified and extended to cover servicing and repair activities, and warehousing in connection with industrial operations.
It has been a legitimate source of complaint that the coverage of the allowance was unclear and too restrictive. By clarifying and extending it to these service activities, the incentive will be particularly enhanced. It will also cover premises which are occupied under licence as well as those that are leased.
Then there is the enterprise package, and here I particularly single out the doubling of the limit for the business start-up scheme and the roll-over of unused relief from 1981–2 to the following year. This is a uniquely valuable scheme for raising new equity capital for small businesses. What is now essential is that accountants, bank managers, solicitors and others who advise potential investors should know about the scheme, understand its details and appreciate its value.

Mr. Patrick Cormack: Will my right hon. Friend ensure that all Members of Parliament are circulated with the full details of the scheme, so that they can make it known in their constituencies?

Mr. Jenkin: I am most grateful to my hon. Friend for that suggestion and will consider how that might best be done.
Under the business opportunities programme, the series of conferences and seminars across the country proved to be a really worthwhile venture in getting over to small business men and their advisers the range of help now available, including the business start-up scheme. I know that the House would like to offer its warm congratulations to my hon. Friend the Under-Secretary of State with special responsiblility for small businesses for the vigour with which he tackled the programme.
The loan guarantees scheme has also proved outstandingly successful. Nearly £100 million has been lent, and the limit on the scheme is now to be raised from £150 million to £300 million.
Premises and cash are two of the essential needs of those running small firms. The Budget provides further worthwhile help with those.
Then there is the innovation package of measures costing £130 million over three years. On Wednesday, I gave examples of the kind of schemes that will be covered by this package, including money for information technology centres—which are necessary to train more young people in this new technology—the extension of the "Micros in Schools" scheme to primary schools, the extension of the robot machine tools scheme to flexible manufacturing systems, new allocation for the fibre optics and opto-electronics schemes and other measures.
Of particular interest to the House will be a new scheme for encouraging small engineering firms to buy new capital equipment such as machine tools, metalworking and welding equipment, metrology equipment and so on. I hope to announce details of the scheme shortly. Increased support will also be given to space—we shall expand the national programme. This will enable the United Kingdom space industry to play a full role in exploiting the advances in business communication systems, remote sensing, satellite television broadcasting, marine communications and preparatory work on cable television.
The extension of the 100 per cent. allowance for rented TV sets with Teletext, which is a highly successful British invention has been warmly welcomed by the trade.

Mr. Michael Marshall: The announcement about 15 million for the space programme will be warmly welcomed. However, does the Secretary of State agree that there is already a United Kingdom national space programme with the defence satellite and the almost certainty of a direct broadcasting satellite? Could he say how the £15 million will inter-relate to new projects? In particular, did I understand him to say that the remote sensing programme is now likely to go ahead by Easter?

Mr. Jenkin: At the risk of disappointing my hon. Friend, who knows a great deal more about these matters than do I, I shall have to write to him about this. The precise details have not been entirely settled, but it is important that we are able to contribute both to the European Space Agency programme and to the growing development of our own national programme. My hon. Friend was right to mention direct broadcasting by satellite because the exciting thing about that is that this will be the first private enterprise satellite put up anywhere in the world.
All these measures to help industry are directed to improving industry's competitiveness and this is essential if we are to recover lost customers and jobs.
I come now to another initiative that the Government are taking to improve efficiency. The Chancellor referred in his speech to changes that the Government are making in their dealings with the nationalised industries. We aim to put the relationship with these industries on to a more satisfactory basis. The changes that I shall outline take full account of their statutory responsibilities and of their need to operate as commercial enterprises. They aim to ensure that the industries, which are not subject to the financial disciplines of the private sector, and in many cases are not exposed to market forces, nevertheless operate as efficiently as possible. We must see that the interests of consumers are fully protected and that the burden on the taxpayer is minimised. In deciding on these changes, the Government have been helped by the consideration given by the Central Policy Review Staff to these matters.
First, the Government intend to hold discussions with the industries in the coming months with the aim of agreeing strategic objectives with each of them. The intention is to provide a clear framework for their operations. Such objectives, which would be mainly qualitative, would be consistent with the industries' statutory duties and with their financial targets and performance aims.
Secondly, the Government are putting more emphasis on the need for efficiency and an increased programme of references to the Monopolies and Mergers Commission has already been announced. The Government also wish to ensure that the boards of the industries are structured so as to put the maximum emphasis on efficiency from within the industries. Ministers will therefore be discussing with the chairmen the composition of their boards with the aim of reducing their size where appropriate, and of ensuring an adequate proportion of non-executive directors who would bring in a wider experience and help to secure improvements in the efficiency of the business.
Third, the Government are taking steps to strengthen the business expertise in Whitehall for dealing with the


nationalised industries. As a step towards a better understanding, new arrangements are being introduced so that nationalised industries' performance and plans can be more systematically addressed. These changes have been discussed with the nationalised industries' chairmen's group. The chairmen support the objectives underlying the changes and have made a number of constructive comments.
I and the other Ministers involved will be discussing the detailed implementation of these changes with the individual industries for which we are responsible. We shall keep under review the progress made. The changes should benefit both the Government's relationship with the industries and the industries' functioning and efficiency.

Mr. Edwin Wainwright: Does the right hon. Gentleman appreciate that it is not much use getting the good will of managers—although that is important—without the good will of the trade union movement? What is wrong with the country is that relations are not good enough between management, Government and the trade union movement. What discussions is the Secretary of State to have with the trade unions on this important subject?

Mr. Jenkin: The hon. Gentleman is right, and I gave a good example only a few moments ago the effects of the discussions in NEDC, in which the trade unions are fully represented, on energy costs and energy prices. In a moment, I shall be referring to some other points that affect the work forces in these and other industries.
While on the subject of the nationalised industries, I should like to make one other point. Our critics sometimes accuse us of failing to use North Sea oil revenues for the long-tern benefit of Britain, preferring to fritter them away on unemployment benefit and social security. [Interruption.] Despite the ribald cheers from the Opposition Front Bench, the truth is quite different.
I take some figures for the coming year, 1982–83. Total oil revenues are forecast at £6, 160 million, made up of royalties, supplementary petroleum duty, petroleum revenue tax and corporation tax—£6, 160 million! Total capital investment by the nationalised industries in 1982–83 is forecast at £7, 611 million, which will absorb all the oil revenue, and more. This investment is growing fast and, in cash terms, will be 23 per cent. higher than in the present year and 40 per cent. higher than in 1980–81.
The biggest investor is British Telecom, with a capital investment of £2, 380 million, nearly double the figure for 1979–80. Modernisation of telecommunications is exactly the kind of investment that Britain must have if we are to become more competitive. The next biggest is investment in electricity, at £1, 845 million. That is providing the increased nuclear capacity that we must have if we are to cut our energy costs. The next biggest investor is British Gas, which will invest £918 million, including the development of Morecambe bay, the rough field and the construction of the onshore distribution network. Again, this is long-term energy investment.
The next biggest investor is the National Coal Board, at £886 million, much of it spent on developing new coal mines such as Selby, which we must have to replace pits that are exhausted. Other investments include £407 million by BNOC, £302 million by British Rail and so on. In other words, capital investment by the nationalised industries

providing essential energy supplies, telecommunications and transport infrastructure and all the rest, handsomely exceeds the likely revenues from North Sea oil.

Mr. Douglas Jay: If all that is true, would it not help if the Minister explained to the Chancellor that capital expenditure in the public sector now greatly exceeds the PSBR?

Mr. Jenkin: My right hon. and learned Friend has frequently made that point and, when he defends the PSBR, he has made the point that we run a surplus on revenue account and that much of the PSBR, and more, goes into capital investment. The point that I am making is that it is substantially more than revenue from North Sea oil.
One can look at it in another way by studying the figures for construction capital investment in the public sector. That is even higher. Next year's forecast is for £10·2 billion. There is some double counting, because that includes the nationalised industries, but, if construction investment at £1, 671 million is taken out, one is still left with public sector construction, including housing, water, sewers, hospitals, schools and so on, all substantially exceeding revenue from oil.
The point that I am making is a simple one, but it needs to be made. Capital expenditure next year by the nationalised industries, together with public sector construction expenditure, amounting in all to more than £16 billion, is over two and a half times the estimated revenues from North Sea oil. If we did not have those oil revenues, either we would have to raise more in other taxes, or we should have to raise more by borrowing, or we should have to cut spending on revenue account, or we should have to forgo the capital expenditure. North Sea oil is providing for our future. We are not squandering the benefit. The problems that we now face would be incomparably more difficult without it.

Mr. Peter Shore: The right lion. Gentleman has missed the point that most of us have tried to put to him and Treasury and other Ministers during the past few years. Surely it is better to use the oil revenues from the North Sea to finance additional public investment—that is, additional public wealth, producing additional revenue—than to spend it on additional unemployment benefit?

Mr. Jenkin: The right hon. Gentleman cannot have been listening to the figures that I gave. I said that capital investment in the nationalised industries next year will be 23 per cent. higher than in the current year, and 40 per cent. higher than in 1980–81. I cannot understand what the right hon. Gentleman is complaining about. His solution, of course, is different. I shall say a word about that, and come back to the matter later. He calls for a massive reflation, a huge injection of demand into the economy now. My hon. Friend the Financial Secretary demonstrated conclusively in his speech at the end of Wednesday's debate that all experience teaches that overwhelmingly the effect of that would be higher inflation leading to higher unemployment. That has been the history of every attempt at reflation since the war. I shall not repeat the devastating analysis that my hon. Friend gave in the House last week.
A surge in the level of demand is not the right answer for industry. The only way to secure a sustained and inflation-free increase in British manufacturing output is by improvements in productivity and efficiency. That is the way to recapture the share of the home market that has been lost to imports. That is the way to recapture our share of world trade. Although we have made significant improvements in our productivity, we still have a long way to go before we match our competitors.
In 1980, United Kingdom manufacturing productivity was estimated by the National Institute of Economic and Social Research to be no more than one-third of that in the United States, and three-fifths of that of Germany and France. I recognise that comparisons of labour productivity without allowing for differences in labour costs and exchange rate adjustments must be treated with caution, but the general picture is pretty clear. If we look at individual manufacturing sectors in the mid- to late-1970s, it is devastatingly clear. In vehicles, United Kingdom labour productivity was estimated to have been no more than 60 or 70 per cent. of that of European levels. It was the same for iron and steel. In colour television, we were thought to be about 65 per cent. of the German level, and no more than 30 per cent. of that of the Japanese. In aerospace, our figure was estimated to be 40 per cent. of French and United States levels. In toolmaking, the recent sector working party estimates suggest that United Kingdom productivity is only 75 to 85 per cent. of German levels. In tyre production, productivity in the United Kingdom was thought to be at best 70 per cent. of European levels.
It is not the lack of demand which has led to high unemployment in British industry; it is our inability to match the efficiency and productivity of our competitors, and to match their performance in quality, reliability, design and delivery. That is why import penetration has risen, and that is why our share of world markets has fallen.
During the last 10 years, import penetration in United Kingdom manufacturing rose from 16 to 25 per cent.—where it is higher than either in Germany or France. It reached 50 per cent. for cars, motorcycles, television and audio equipment, and textile machinery. It reached 30 per cent. for domestic electric appliances, machine tools and clothing. How often in consumer surveys such as "Which?" is it the imported product which qualifies as the "best buy"? How often does there seem to be no United Kingdom competitor at all—no United Kingdom manufacturer of video recorders, cine cameras, scientific calculators or sewing machines?
Of course we have our success stories. Many British firms are chalking up great commercial successes, both at home and overseas. Productivity is improving. Between the end of 1980 and the end of 1981, manufacturing productivity, measured as output per head, rose by about 10 per cent. That is a major step in the right direction. However, those who, like the right hon. Member for Stepney and Poplar, believe that the problems of British industry will be solved by a massive injection of demand, coupled with massive trade protection, rather than by a steady increase in productivity, are flying in the face of history. Nor is it true to lay the blame on inadequate investment, or, as the Labour Party likes to put it, a "strike by capital". On the contrary—again taking the OECD

figures for investment as a ratio of manufacturing value added—we have not been out of line with our competitors. According to the OECD estimates, in 1973 the United Kingdom ratio was 12, compared with 8 for the United States, 12½ for Germany, 18½ for France, and 20 for Japan. By 1978, the ratio in Britain had risen to 13·5, compared with 9 in the United States, 10½ in Germany, and 15½ in France.
We have fallen down in recent years, not in the quantity of investment, but in the quality of its use. The major difference in the United Kingdom investment record has not been the availability of capital or the willingness of management to invest, but the apparently poor return in terms of output achieved from an increment of capital.
Even during the recession, manufacturing investment, including leasing, held up surprisingly well, but it is essential that much better use should be made of the new investment put in.

Mr. Stanley Orme: It has fallen.

Mr. Jenkin: Investment has gone down, but it has not gone down by as much as might have been expected from previous recessions. We must make better use of it, and the signs are encouraging.
If one message comes through more clearly than any other as I go round the country visiting factories and talking to managers at all levels, it is that managers are increasingly able to do their job, which is to manage more effectively. They are helped—here I come to the point that was raised by the hon. Member for Dearne Valley (Mr. Wainwright)—by a growing understanding of the realities of our industrial needs on the shop floor—a greater realism than is often found on the wilder fringes or trade union of Labour Party conferences. The lads know the score.
Communications between management and work forces are now perhaps better than they have ever been, and this must be used as a springboard for further improvement. It is by talking together, understanding together, and working together that managements and work forces will tackle, as they are now tackling, the real deep-seated weaknesses in our industrial performance. We are overcoming the real causes of "the British disease". Overmanning is being cut, restrictive practices are being eradicated, new working methods are being introduced, and pay settlements are at much more realistic levels. As a result, productivity has improved, and British competitiveness is being regained.
The response to common sense and realism by the Government is common sense and realism on the shop floor. My right hon. and hon. Friends and the country will contrast this common sense and realism with the wild irresponsibility of Opposition parties—all Opposition parties. No doubt the right hon. Member for Crosby (Mrs. Williams) will give us her solution. It is becoming increasingly difficult to take the right hon. Lady and her party seriously. It has become almost impossible for me to do so. I had a letter the other day from a councillor in my constituency, saying:
I very much regret to tell you that I have joined the SDP. The real reason is that I am not cut out to be in politics!
For me, that says it all. We shall have to wait to see whether the SDP candidate in Hillhead is cut out for politics.
The right hon. Member for Stepney and Poplar has warned us what to expect if he should ever assume responsibility. He puts forward one half of his alternative


policy with relish—his give-away. The generosity of his intentions grows with each repetition—£4 billion, £6 billion, £8 billion and now he tells us that he can find £9 billion in higher spending and lower taxes. As for the other half of his policy, he tells us nothing of the devastating effects of the higher borrowing and higher interest rates that such a policy would bring in its train. I hope that I may have the right hon. Gentleman's attention for a moment. Where was he during the IMF Budgets of the right hon. Member for Leeds, East (Mr. Healey) in 1976 and 1977? Indeed, we do not even need to look at those Budgets. The right hon. Gentleman knows the truth perfectly well.
Four years ago, in the rarefied atmosphere of the Cardiff and district Fabian society, the right hon. Member for Stepney and Poplar said:
If Britain—or any country—persistently pays itself more in money terms than the actual value of the goods and services it produces, and if it does so to a markedly greater extent than its trade competitors. then one of two consequences are certain: first, if our exchange rate is fixed, British prices will become uncompetitive both at home and abroad, and unemployment will rise; second, if we devalue our currency or allow our exchange rate to float down, we should not be surprised if foreigners lose confidence in the value of the pound and do their utmost to keep their money out of London.
That is quite right. But how on earth can the right hon. Gentleman square that realistic and common-sense approach with the extravagant proposals that he now puts before the country? I shall anticipate what he has to say. He has an answer, although he sometimes does his best to conceal it. His answer is the same as that of the right hon. Member for Huyton (Sir H. Wilson) in 1966, the same as the answers given by Mr. Roy Jenkins in 1969 and the same as the answer given by the right hon. Member for Cardiff, South-East (Mr. Callaghan) in 1976—a prices and incomes policy.
Last January, the right hon. Member for Stepney and Poplar called for
a national understanding with the trade unions.
He did not stop there, but referred to
a fresh determination by Government, employers and unions to reach annual agreement
on a number of things, including
earnings from employment.
The full description of that hope runs to over 100 words, but is described accurately in four—prices and incomes policy. We have heard it all before.

Mr. Shore: It is good of the right hon. Gentleman to give way, but before he gets carried away by his own rhetoric, may I remind him that the alleged extravagance of my proposal—I have been extraordinarily modest—involves a borrowing requirement that is no greater as a percentage of gross domestic product than the Chancellor of the Exchequer achieved in 1980–81?

Mr. Jenkin: My right hon. and learned Friend the Chancellor of the Exchequer has very properly set himself a target of a steady reduction in the public sector borrowing requirement, as a percentage of gross domestic product. The right hon. Member for Stepney and Poplar would simply turn that round again. The right hon. Gentleman tries to protect his flank by his understanding with the trade unions. It is just our old friend "Solomon Binding" and the social contracts all over again.
I am content with the verdict of the former Chief Secretary, the right hon. Member for Heywood and Royton (Mr. Barnett). He should not have written his

recent book; it was rash of him. He described the social contract as disastrous. He was appalled by the price that the Labour Government had to pay and wrote:
To my mind the only give and take in the contract was that the Government gave and the unions took.
Therefore, the right hon. Member for Stepney and Poplar is unlikely to take his right hon. Friend the Member for Heywood and Royton with him.
What about the Opposition Front Bench? Once more, I quote:
I am bitterly opposed to the idea that you can settle wages by some high and mighty authority from London be is Downing Street, the Pay Board, or anything else.
No doubt the Leader of the Opposition recognises his own words. Where does the right hon. Gentleman stand in relation to the annual understanding with the trade unions on matters such as income from employment?
Even if the right hon. Member for Stepney and Poplar could carry any of his right hon. and hon. Friends with him, I shall spell out his bold assumptions in plain:English.

Mr. Leslie Spriggs: rose—

Mr. Jenkin: I shall not give way. The right hon. Member for Stepney and Poplar assumes that with a huge injection of demand, an extra £9 billion—with its massive effect on interest rates and the exchange rate and, therefore, on inflation—trade unions and their members would, at the Government's behest, agree to hold down wages below the cost of living. The right hon. Gentleman assumes that will happen at a time when, according to his prescription, the economy will be growing and employers and employees may expect real wages to increase.

Mr. Spriggs: rose—

Mr. Jenkin: In short, the right hon. Gentleman is turning market forces upside down. That never worked before—why should it work now? His proposals will not convince anyone. On Wednesday, the right hon. Gentleman gave us a sermon on the text that a man roust be presumed to intend the natural and probable consequences of his conduct. However, the natural and probable consequences of his conduct is that the Labour Party will lose the next election, and will deserve to do so.

Mr. Stanley Orme: The Budget has been haunted by the spectre of unemployment—an issue barely dealt with today by the Secretary of State. Unemployment is still rising—as confirmed by the figures in the White Paper—and is at a level unacceptable to our society. We believe that it is the central issue facing us today.
The Budget will do nothing to reverse the present trend. By increasing national insurance contributions, allowance has been made for an increase in the number of those out of work of between 200, 000 and 300, 000. That is in addition to the 3 million-plus who are already unemployed. Therefore, the Government have endorsed unemployment—and rising unemployment.
As we move further away from the Budget Statement last Tuesday, the initial response that it was neutral is being proved wrong. The Budget is negative and deflationary. Some Conservative Members have been taken in by the Chancellor of the Exchequer and his Budget. As time goes on and as the Budget unfolds, they will find that the disasters about which we have spoken will, unfortunately, be there for all to see.
The Secretary of State spoke about the package for industry. We welcome some of the measures, small though they may be. As the Secretary of State knows, over the past 12 or 18 months we have advocated some form of subsidy for electricity prices, but we have received little response. However, if all the reports are to be believed, many of the industrial items were included in the Budget at a very late stage.
Let us consider an independent assessment of the Budget. I think that the Secretary of State followed Dr. Paul Neild of the stockbrokers, Phillips and Drew, last Wednesday morning on the "Today" programme. Dr. Paul Neild clearly stated that the Budget's effect on industry would be minimal. He referred to "peanut measures" and went on to say that the Chancellor of the Exchequer was "tinkering about" with unemployment. Therefore, I shall deal with the central issue facing our economy—industry and the part that it can and should play in turning round the effects of the Government's current policies.
My right hon. Friend the Member for Stepney and Poplar (Mr. Shore) laid out detailed proposals in the form of an alternative budget. I noted that the Secretary of State could not demolish those proposals. I wish to take the proposals further and relate what my right hon. and hon. Friends have said about our policy to the industrial base.

Mr. Tim Renton: I have a copy of the alternative budget proposals of the right hon. Member for Stepney and Poplar (Mr. Shore), but I cannot find in them any reference to how much they would cost. Can the right hon. Gentleman tell us how much the proposals would cost in total over and above what my right hon. and learned Friend the Chancellor of the Exchequer proposed?

Mr. Orme: Perhaps the hon. Gentleman will read the document. If he has any further questions, he can consult my right hon. Friend. The costing is included within those proposals.
I wish to give a brief analysis of what the Government's current policies have meant for industry. We shall come to the cost as we go along.

Mrs. Elaine Kellett-Bowman: Why not now?

Mr. Orme: Instead of parroting such questions across the Floor of the House, let us consider the state of British industry and examine the constituencies represented by Conservative Members. We should consider the figures for manufacturing production since the Government took office.

Mr. Patrick Jenkin: Why was the right hon. Gentleman so coy with my hon. Friend the Member for Mid-Sussex (Mr. Renton)? Why could he not tell my hon. Friend that the cost is £9 billion? My hon. Friend wishes to know how the right hon. Gentleman believes that we can pay for it.

Mr. Orme: The hon. Member for Mid-Sussex (Mr. Renton) asked where the figures were. If he examines my right hon. Friend's document, he will see the figures spelt out. The hon. Gentleman should have read it before he came to the House.
First, I wish to consider the steel industry. By the end of 1980, productivity—which is the crucial, central point—in the steel industry had still not reached its 1979

level, despite the fact that the work force had been reduced by almost one-third. For engineering, the productivity picture is even worse, despite a fall in employment by 18 per cent. Productivity in the construction industry has fallen by 8 per cent. since the Conservative Government took office, despite the fact that the work force had also fallen by more than 10 per cent. For manufacturing as a whole, a marginal improvement in productivity of less than 1 per cent. since 1979 has been achieved at the cost of a 17 per cent. reduction in the work force. That represents the jobs of 1, 250, 000 men and women in industry. Higher efficiency in British industry cannot be purchased at the expense of jobs. Clearly it does not work from the operation of the Government's policies.
British industry's problems lie not in overmanning but in under-investment. In the past three years investment has fallen. The steel industry has seen a drop of 55 per cent. in average quarterly investment levels since the Government took office. The engineering industry has seen a drop of 27 per cent. The vehicle industry has seen a drop of 28 per cent. Manufacturing as a whole has seen a drop of 24 per cent. That is appalling. No industry has suffered more than the steel industry from the monetarist recession. There have been catastrophic closures in the public and private sectors. Conservative Members have asked about the private sector—firms such as Firth Browns, Duport and many others which have lost workers and been put in jeopardy. In the 12 months to September 1981, 63, 000 jobs were lost in the steel industry, and several thousand more workers face the dole queue this year.
From crude steel production to special steel manufacture, the record is grim. Lack of demand has undermined investment, even in some of our most modern facilities. Britain is dangerously close to the point where we shall be unable to produce enough steel to support the desperately needed upturn in industrial activity, thus making us vulnerable to an even higher level of imports. The Labour Party has consistently opposed further reductions in capacity, and it will continue to do so.
The Secretary of State cannot blame the world recession. Britain's volume exports of manufactures have held up remarkably well. When the Government took office, the export volume index stood at 115. It rose to 117 a year later, and in October 1981 it still stood high. Had it not been for the growth in the volume of exports, the impact of the monetarist recession would have been even more devastating on the domestic economy. With unemployment, low production levels, massive under-investment and a high exchange rate, it is not surprising that there has been an extraordinarily large increase in import penetration, which the Secretary of State acknowledged in his speech. The right hon. Gentleman blamed it on industry. We blame it on the Government's policy and approach.
If we consider the alternative, we should not ignore the Government investment and intervention of some of our main competitors. Japan and France are striking examples. In Japan, which is fast becoming the major competitor of most advanced industrial nations, we see direct intervention in industry by a leading capitalist country. In the 1960s, Japan concentrated on capital-intensive products. Steel, motor cycles and ships were the priority sectors. By the mid-1970s, more complex products such as cars and colour televisions dominated Japanese industrial strategy. For the 1980s, Miti—a Government


sponsored planning body—identified knowledge-intensive industries such as computers, special chemicals, sophisticated machine tools, robotics, telecommunications and energy-saving equipment as priorities. Those are the areas of industry to which Britain should give a lead. If the Government will help, we can develop our industries. That is what we are not doing at the moment.

Mr. Tim Eggar: The right hon. Gentleman compares the progress of Japan with Britain. What is his reflection about the fact that the Labour Party, which was in Government from 1964 to 1970 and from 1974 to 1979, did nothing along the lines that he is suggesting?

Mr. Orme: Let us consider the National Enterprise Board. The Secretary of State may groan, but some of the industries that the Government are selling off were made successful by that board. The Government and the National Enterprise Board invested in crucial sectors of British industry. The hon. Member for Enfield, North (Mr. Eggar) suggested that the Labour Party did not go far enough when in Government. If he is saying that, after the Conservative Government's policies, we shall need much more stringent and far-reaching measures, the answer is "Yes".
We welcome the first sign of an interventionist industrial strategy from the Government, which is reflected in their decision to provide about £130 million of new money to information technology. We note the observation in the Financial Times that the Secretary of State
is taking a more robust view of his Department's role in encouraging industrial developments in technology and eschewing the stand-off approach of his predecessor"—
the right hon. Member for Leeds, North-East (Sir K. Joseph). It is not difficult to be more enthusiastic than the right hon. Member for Leeds, North-East, who is now Secretary of State for Education and Science. However, we want the right hon. Gentleman and the Department to go much further. We share the Department's view of its role and we want further development to take place.

Mr. Patrick Jenkin: I am glad that the right hon. Gentleman shares my ambition to switch more of the Department of Industry's budget to developments to support new technology. Will he assure me that I shall have his support if I can reduce the amount of money that needs to go to some of the older industries by moving them into the private sector and getting them off the taxpayer's back?

Mr. Orme: We are talking of extending investment and providing new money. We are not talking about switching money from industry to industry. There are many areas that need investment and direct Government intervention.
We welcome the aid that will be given to firms to develop new production engineering techniques. We believe that computer-aided design and manufacturing and robotics are key areas of technology. Industry should be given aid and encouragement in developing them.
Information technology is a new industrial revolution and we are standing at its very beginning. We face competition on an enormous scale. In the United States, expenditure on research and development is many times greater than ours. The greatest business in information technology outside the United States is centred on Nippon

Electric, which is one-sixth the size of IBM. ICL, which is one-quarter the size of Nippon Electric, has had to shed 1, 500 workers and close facilities at a time when ft should be increasing investment. That shows a lack of faith in our own capacity. The Minister for Industry and Information Technology shakes his head. I know that he is doing a great deal of work in trying to promote new technology and is travelling round the country doing so, but it is no good doing that if at the same time the Government allow indigenous industries to close.
The French are spending £470 million a year on developing their information technology industry. One of the first things that the Government did on taking office was to cut the Labour Government's microelectronic support programme from £70 million to £55 million. We are glad that, belatedly, some of the damage is being repaired. However, we are especially concerned about the Government's attitude to the so-called fifth generation computers, which may be the most important development ever in information technology. These are the expert or knowledge-based systems. The Government have dithered for months, but we understand that they set up a seminar some week ago and will announce a scheme in the summer.
The Japanese have set up an institute for fifth generation computers, which will be backed by massive funds. They acknowledge the work that has been done in British university departments, which we are now closing. In this critical area, ad hoc responses and one-off schemes are not enough. We must have a strategy that is backed by massive funding.
We welcome the scheme to place computers in schools. I understand that the scheme is to be extended to cover primary as well as secondary schools. It will be ironic if we teach our children the advantages of using computers but lose the capacity to make them. Government policy on higher education, especially technology, cannot be successful when universities such as Salford, Bradford, Aston and Stirling are suffering cuts of nearly 50 per cent. What action is the Secretary of State taking to reverse this disastrous policy? What support is there in Britain for the Government's policy? There is little evidence of any support for it.
A measure of the distance that we have to travel to catch up with our competitors is given in the figures for the robots currently in use in a number of economies. Japan has approximately 10, 000 robots presently in use—more that 12 times the figure for West Germany and 54 times the number now in use in Britain.
Overcoming the impacts of new technology is not without its financial costs to the Japanese Government. They run a scheme to pay up to two-thirds of technologically redundant workers' wages. The New Scientist reported:
Between 1975 and 1977, for instance, 70, 000 businesses received state subsidies that let them keep on their payrolls 3½ million workers who would otherwise have been fired.
What a contrast with Britain. The adoption of such policies in Britain and the safegaurds of technology agreements negotiated with the trade unions could enable us to achieve a similar position. However, we have had the damaging effects of selling off profitable publicly owned companies such as British Aerospace, Cable and Wireless and Amersham International. A Labour Government will reverse this policy. Successful publicly owned industries


that are making profits are being broken up by the Government by their privatisation and denationalisation proposals.

Mr. Albert McQuarrie: Tell us what was said in Perth on Saturday.

Mr. Orme: The combination of this and liberalisation, where the revenues of profitable nationalised industries such as British Telecom and British Gas are to be unashamedly siphoned off into the pockets of Project Mercury, can only further harm the prospects for British industry.
The Secretary of State has made a major speech, but he did not refer to the press statements and reports that there is to be further privatisation of British Telecom. Will he make a statement on this outrageous proposal to sell off further crucial parts of one of our major, successful publicly owned industries? When will he make a statement? We understand that there has been a great deal of briefing on this issue. We have not had a statement from the right hon. Gentleman. We have to get our information from leaks. Surely he has a duty to report to the House. Perhaps he will say something now. It seems that he is not prepared to do so. I did not think that he would tell us anything.
Today the Labour Party has launched its campaign "Plan for Jobs—A Socialist Alternative", in which it spells out a 10—point programme for the growth and regeneration of British industry. It includes the following major points. First, the Labour Party wishes to initiate expansion to enable sustained economic growth over five years to bring unemployment below 1 million. This will involve boosting spending power through public investment projects, major construction programmes, better services and improved social benefits.
Secondly, it wishes to see the planning of industry for increased investment, the future aims of major firms, the extension of public ownership and the encouragement of worker co-operatives.
Thirdly, it wishes to see planning to establish growth in trade, including the control of imports and setting the pound at a level which will allow for fair competition between our industries and those overseas.
Conservative Members will probably want to know where the money will come from. If we were to halve unemployment, we would have another £6 billion to invest in industry. We are now spending £12 billion on unemployment benefit and support services.
Moreover, the Labour Party's policies will ensure a more balanced economy throughout the country, with assistance to the regions through regional development agencies and the stimulation of local economies through local enterprise boards. We aim to ensure a regional spread of employment to tackle the problems in areas which are most desperately in need. When the upturn comes, areas such as the North-East, Scotland and Merseyside, where structural unemployment is and will remain for a long time, might still be left behind unless we tackle those problems.
The social consequences of unemployment are apparent to all. Unemployment for one person is a tragedy. Unemployment for 3½ million is a national disaster. The Government are the only Government since the war to have turned back the clock. Public services have been

ripped to shreds, and those whose lives they were designed to improve have been neglected. Everything public has begun to decay. Increasingly, research is proving the link between illness, both mental and physical, and unemployment. Suicide rates are horrifying. There are pressures on young people who have little chance of getting work. One needs only to look at society to see what those problems now are. There are pressures on women who, in many cases, are doing two jobs—one inside the home and another outside—and often they are the only bread-winners. Pressures on laid-off and long-term unemployed men and women undoubtedly cause serious illness and more tragic consequences.
That is the human effect of the Government's policies. The Government's answer is to avert their face and to proclaim proudly that they are still on course and that there is no alternative. Of course there is an alternative. Every day, every factory closure and every lengthening of the dole queue makes more urgent the implementation of the alternative that the Labour Party puts before the House and the country.

Mr. Edward Heath: First, I shall congratulate my right hon. and learned Friend the Chancellor on the positive and constructive action that he took in the Budget. I shall then deal with two matters of rather wider concern—first, the position of oil in the world market, and, secondly, the relationship between the United States and European economies.
I am glad that my right hon. and learned Friend the Chancellor has taken many of the actions that he has, especially in reducing the national insurance surcharge. I hope that this is the beginning of a move to abolish the surcharge.
I am grateful also for the action that he has taken with regard to the social services, especially in not going ahead with the 2 per cent. differential on unemployment benefit, and for his action on mobility allowances. In all those things, I am sure that he has the support of all Conservative Members.
With regard to personal taxation, I am especially glad that the Chancellor has decided to deal with the problem in the form of allowances and by moving the bands. At such a time, it is far more useful to do that and to try to maintain the status quo with regard to income tax, which is broadly what the Chancellor has done, rather than to make reductions in some areas. Those who urged reductions in particular areas were wrong. As the Chancellor pointed out, his measures mean that the less fortunate will move out of the tax band, at least for the time being. Lord Butler, to whom the Chancellor referred, did just that in his first Budget. I am sure that it is the right policy on occasions such as this. What is more, the cost of an overall change in income tax rates sufficient to change people's motivation in industry or elsewhere is today so large that in the present circumstances it is impossible to see how any Chancellor could be in a position to carry it through. That is one of the hard facts that we must face. We want to change motivation, but to do it that way is so expensive that it is extremely unlikely that any Chancellor could do it, certainly in only one or two Budgets. I am pleased, therefore, with the constructive and positive measures that the Chancellor has taken.
I am also naturally glad that the Chancellor has taken many measures to help industry. There are to be special inducements, which have been widened, subsidies and even a price freeze—that is the term that the Chancellor used, and the Secretary of State for Industry used it today. It is astonishing how these dirty words such as "subsidies" and "price freeze" are coming back into the vocabulary again.
The Secretary of State for Industry has just gone to some length to demonstrate that the total amount of investment provided for the nationalised industries and in other ways is considerably greater than the revenue that is received from oil. I think that the Chancellor said that it was more than £7½ billion. These are all the companies that were to be allowed to go to the wall, so that they would then not cost the Exchequer a penny. Now—and rightly—they are to receive £7½ billion investment. I am grateful that that, too, should be so.
Gradually, therefore, we are moving towards a pragmatic handling of the economy—nowhere more so than in monetary policy. The Chancellor explained this himself. He has moved from brackets of 5 to 9 per cent. to 8 to 12 per cent. He has faced the facts. As the money supply has obstinately refused to comply with his brackets, he has moved his brackets to meet the money supply. I in no way accuse the Chancellor of being opportunist. His action is pragmatic and the path of political wisdom. I congratulate him on it. He will not quite meet the situation. Nevertheless, he has gone a long way to deal with it. When he examines the figures since the Government came to power, the Chancellor will recognise how right he is. During that time, M1 has increased by 29 per cent., M3 has increased by 62·2 per cent., and production has decreased by 17 per cent. Those figures give a preliminary indication that some of the monetarist dogmas are not quite so effective or accurate as they were hitherto thought to be. I in no way blame the Chancellor for that, although others will. They will say that if only he had been a real monetarist, with production decreasing by 17 per cent., money supply would have been reduced by 17 per cent. Think then where we would be. But look where we are now with an increase of 62 per cent. If money supply had fallen by 17 per cent. the resulting unemployment figure today does not bear thinking about. The Chancellor is absolutely right to do what he is doing. As I said yesterday, monetarism is dead and the alien doctrines of Friedman and Hayek remain only to be buried.
I congratulate the Chancellor on all this. It is a significant move. I am sure that the Chancellor would not challenge the fact that the changes that he has made are marginal over a large area. They are none the less welcome and I am sure that he will not overestimate the effects that he expects to gain from them.
The Secretary of State for Industry has taken measures that we hope will induce small businesses to be created, but how will those measures make life easier for existing small businesses? That worries me. In my constituency, small businesses are in the utmost difficulties. The main reason is the level of interest rates, to which I shall return. We must remember existing firms while offering inducements for new firms to come into being.
We have dealt with supply side economics. We have gradually broadened out over the whole of that, but where is the demand that will reactivate and recreate our economy to come from?
The Chancellor finished his Budget speech by saying that for those who become productive the markets will be open. Where will the home markets be open for those who do not export? And in the export markets, how are we to cope with countries that are under similar pressures to improve their productivity?
I make it plain that I have always favoured increasing productivity. Indeed, the first document that I ever published as leader of the Conservative Party looked forward to the time when we should become a high-wage, high-productivity economy, instead of a low-wage economy, to which effect all the pressures have been exerted in recent years. But neither the Chancellor of the Exchequer nor the Secretary of State for Industry has given any indication as to where the demand will come from. [HON. MEMBERS: "From selling abroad."] If we are to sell abroad, we must rely on other countries to reflate. So we shall benefit from their action while flatly refusing to reflate ourselves. I do not regard that as a very honourable or reliable policy to pursue, as other countries have measures open to them if they find us doing that.
The question therefore remains: Where is the demand to come from?

Mr. John Stokes: Will the right hon. Gentleman give way? Will not the demand come from home buyers, who will buy home-produced products which are better made than foreign products, as surely they will be with the improved productivity of our home firms? The demand is there, but it is not being met because British indusrtry is not efficient enough.

Mr. Heath: My hon. Friend—if I may use the term "friend"—is very keen on buying British, as I am, whenever it is better. But he must keep this in perspective. It is not possible to deal with 3·3 million unemployed on that basis, especially, as I emphasised although he may not have heard, when other countries are under the same economic pressures to improve productivity and maintain exports. That problem must be faced. In my view, therefore, the question is not whether there will have to be reflation. There will have to be reflation. I repeat that reflation is not the same as inflation. Reflation is a means of recreating economic activity in a country or an area, and it does not necessarily lead to inflation. Moreover, the definition is not the same. There will have to be reflation. The question is at what time and in what circumstances. That is what really matters.
The summing up of the Budget is that there will be a further increase of 300, 000 in unemployment in the coming year, so that it will rise from just over 3 million to 3·3 million. The real figure will then be more than 4 million. The major problem therefore remains in the economy. I repeat, how is it to be dealt with?

Mr. John Browne: I have listened with great care to what my right hon. Friend has said. I wish to ask two questions.
First, history since the last war shows that, although Governments have injected increasing amounts of money into the economy, long-term unemployment has continued to rise almost without hesitation. What makes my right hon. Friend believe that a massive injection by the Government will reduce unemployment in the long term?
Secondly, with reference to the question put by my hon. Friend the Member for Halesowen and Stourbridge (Mr. Stokes), does my right hon. Friend not agree that it is


insufficient merely to restore productivity, because there is no point in having vast quantities of our own goods which nobody buys merely sitting in inventory? The answer is surely that we must restore competitiveness. There is demand in our own economy so long as we are competitive.

Mr. Heath: I disagree with my hon. Friend's last point. Of course there is demand in our own economy, but: it is inadequate. That is the point. If we are to deal with this and at the same time to carry on trade with other countries and the European Community, to which we wish to sell our goods, we need increased demand in exactly the same way as they do.
My hon. Friend referred to the lessons of history, but his facts are not correct. As recently as 1974, when the Conservative Government were in power, unemployment was less than 600, 000 and falling and we had the lowest inflation rate of any industrial country in Europe. That defeats the argument that unemployment was increasing throughout the whole period. It is simply not true.
It is true, however, that unless industrialists can see a clear market they will not produce. That means that they will not invest and thus will not take advantage of many of the inducements that are offered. That is the lesson that we have learnt through all the Budgets since 1951. Even with allowances, why should an industrialist invest if he has to pay high interest rates and take all the risks of the entrepreneur only to find that the market is not there? Of course he will not. In any case, when interest rates are high he does not need to take the risks. He simply puts his money on deposit and gets the return. There are great British companies that now boast of the amount of cash that they hold, because that is a much easier way of life than to be an entrepreneur, to invest and to produce. The entire Western world is up against that problem.
As I have said before, we have become not a materialist society—to which some people may object, although one cannot have culture without resources—nor a consumer society—to which I see no possible objection if it helps the housewife—but an interest-interested society. That is what we are today. One has only to drive around in one's car with the radio on to be informed every half hour where one can obtain an extra one-eighth or one-sixteenth per cent. by moving one's money quickly enough. An interest-interested society is not a productive society because the money is simply deposited to earn interest from the banks, which charge far more to people who borrow in order to keep going.
The Chancellor rightly said that, for us, oil is a mixed blessing and will continue to be so. We should be very unwise to think that the fall in oil prices is permanent in any way at all. We shall learn from the next OPEC meeting whether the OPEC countries intend to dig in and, broadly, keep the $34 price, or whether they will break ranks. If they keep that price now, they will reduce production sufficiently to mop up the existing oil surpluses. If the price now falls, if and when a world recovery takes place, the price will be raised again and we shall face the same problems that we faced at the end of 1973 and at the end of 1979.
From time to time, OECD and the industrialised countries have discussed making an approach to OPEC to try to secure a stabilisation arrangement for the supply and

price of oil. This would, of course, also have to involve the developing countries—first, because for political reasons OPEC will not cut itself adrift from them, and, secondly, because the developing countries, particularly those with heavy indebtedness, are very greatly affected. Nevertheless, is this not a time when it might be possible to approach OPEC and try to negotiate an agreement on the basis that it can now see the damage done to the Western world by OPEC prices draining off a great mass of money—the surpluses—which then cannot be put to productive use. Moreover, the OPEC countries themselves will suffer if they break ranks and the price of oil falls considerably, only to rise again later even more quickly to levels that will be extremely damaging to us.
It is in the interests of the Western world to have a stable relationship now for oil production and prices if we can possibly achieve it. Until the end of the century we shall not be in a position to isolate ourselves from OPEC or from the other oil and energy producers, and by then most of our own oil will have been used up in any case. Therefore, I suggest that the Chancellor should work with his European colleagues to make an approach and to see whether this is a timely moment to create an agreement with OPEC.
None of us can say that it is not worth trying to reach such an agreement. We should not give in without trying very hard to settle a major cause of our problems in the past 10 years which will give us equal trouble in future unless we are able to stabilise the situation. That also means political action by the Foreign Secretary to try to reach a solution, once again in the Middle East over the Palestinian question, about which nothing is now being done. Until the United States and Europe make up their minds that they are going to bring about a settlement—they can do that if they make up their minds—the lasting cause of disruption in the Middle East will continue.
My next point concerns the relationship between the European and American economies. The American economy is now heading for a depression. We are not in a cyclical recession; we have had it for seven years. In a normal cyclical recession, one is down, up and out again within seven years, but Britain is getting deeper and deeper into it. There are 26 million unemployed in OECD countries and, by the end of the year, there will be about 30 million unemployed. The United States now recognises that it is heading for 10 per cent. unemployment, it has a vast budget deficit of over $100 billion, some say that will soon be $120 billion, and very high interest rates. The rest of us are presently being forced to follow in that train, as the Chancellor said, although he put it very politely. He said he hoped that the Americans would ease off. The Economic Secretary to the Treasury, in his usual way, put it much more bluntly at the end of his wind-up speech when he said that of course we followed behind American interest rates and that nobody had ever denied that. They are both right. However, can we afford to do that? In my judgment, we cannot.
It is clear that American interest rates will remain at a high level, even if not at their maximum level, for a long time. They are fixed under its system by the Federal Reserve Bank and Paul Volcker, its chairman, who is responsible to no one; he is not responsible to the President, Congress or any elected body and, therefore, pursues the policy he wishes. It is completely unacceptable that we in Europe should be passively trailing behind this


policy and, apparently, unable to do anything, while we see our unemployment rising from 3 million to 3·3 million to 3·5 million, and ever increasing. As the American depression deepens—one already sees that happening from the state of its motor and construction industries, even in California, where construction is nearly at a standstill—so its trade with Europe will decline or, alternatively, it will get a much bigger balance of payments deficit. Similarly, America will not be able to trade to the same extent with developing countries, and that will affect Europe's trade with such countries. Therefore, we are in a vicious downward spiral.
If the Americans allow their balance of payments to go drastically wrong, there will be a sudden dive in the dollar because people will lose confidence in it. That will also affect European currencies. Therefore, there is every reason for saying that we cannot continue behind a policy of high interest rates and a very high budgetary deficit which may then lead to a lack of confidence in the currency.
There is no intellectual justification for that policy, although there was so long as the Bretton Woods agreement was fully operational. We could then say that everybody knew what to do in given circumstances; if one had a deficit or a surplus, one knew what to do. The net result was understood by everybody and that balanced the system. However, now the whole of that system has broken down, there is no intellectual justification for saying that we must have a completely free capital movement throughout the Western world. We are condemning ourselves to following American policies imposed, so far as interest rates are concerned, by one man and his board who are responsible to nobody. That is the plain situation.
I have suggested before that the European Community must now set about insulating itself on capital movements. Technical arguments do not make that impossible. Of course, there will always be the technicians and bankers who prefer the other way—moving capital all over the world—saying that they do not like the other argument. We were able to operate that policy from 1931 to 1980, and we did it efficiently and effectively. When I first made this proposal last October, a senior European politician said that it was an outrageous suggestion. However, he now says that it has become a logical necessity. That is the difference between the two approaches.
What is the alternative for us and the rest of Europe? I agree that we cannot, to any great extent, reflate on our own without the risk of damage, and neither can another European country. Therefore, we are condemned to be dragged along behind United States' policy, which it is entitled to employ if it wishes, with our unemployment getting deeper and deeper, no matter what the Chancellor does nationally. We must face that alternative, and I ask the Chancellor to face it, because it is crucial, if we are not to see our society destroyed by ever more massive unemployment, which is greater than we have ever seen before in our history or the world's history. They are the two aspects in the outer world—

Mr. Frank Hooley: The right hon. Gentleman seems to be suggesting a European solution to the undoubted international currency problems which he has clearly set out. However, would it not be better to work

for a wider international solution, through the use of the special drawing rights and the creation of the substitution account, which will solve the dollar currency problem?

Mr. Heath: Of course, I should prefer a wider arrangement and I wish that one could return to a stable Bretton Woods situation, because we now find ourselves in this position. However, there is no practical way we can do that and, if the Americans are determined to continue with this policy, they will obviously not take part in a wider organisation determined to follow another policy. On the other hand, the European Community is to hand and we can use it. We have also got the European monetary system and that is part of the organisation. Considering the matter from a practical point of view, if we are to get action taken, and it is desperately urgent that we do, this is the first way to do it. Let us broaden out afterwards, by all means. If the Japanese or other countries want to come in, they can, but we must make a start somewhere and Europe is the place to do that.

Mr. Eric S. Heffer: If the logic of the right hon. Gentleman's arguments is right—I agree that we must concern ourselves with capital movements—and if it is right to stop them going beyond Europe, is it not right that we should have greater control on our own capital units and decide our own policy which may not, of course, be in the interests of the majority of the EEC?

Mr. Heath: I note the hon. Gentleman's view. On the EEC, we should be able to maintain the freedom of capital movement and, although we should have different interest rates, they would be at a much lower level than the prevailing rates on the other side of the Atlantic. I do not say that one will have uniform interest rates between all member countries, but different rates according to their economies and as they want them, at a much lower level that would not damage the situation.
It is extraordinary that Britain has the biggest depression that anybody can remember and yet we have interest rates at these appalling levels. In 1931 the Government fought the election on keeping on the gold standard and, as soon as they won, immediately and wisely got off it. Having done that, Neville Chamberlain—as Chancellor of the Exchequer—reduced all interest rates and had a conversion issue for all stock, which he brought down to 3·5 per cent., and others that he issued at 2·5 per cent. The contrast with today is even greater unemployment, unused capacity and falling production, but we still have interest rates at these appalling levels. They are damaging to small and big firms and the whole productive effort of the nation and of European countries.
We simply cannot hope that the Americans will reduce those rates in time. They are learning their lessons painfully, but will take a long time to learn them all. We do not have the time to spare. I am thinking not about elections but of the welfare of millions of people who, at this moment, live miserable lives because they have not got jobs. Tensions exist in families when children go home from school and find that their fathers are unemployed. Above all, those in their fifties who are now being sacked believe that never again in their lifetimes will they have jobs. We must think about them. How could we remain passive in these circumstances and do nothing? We cannot do that, and it would be a crime if we did.
I ask the Chancellor to deal with these world-wide matters. There are other aspects in his Budget which I welcome and on which I congratulate him. However, the big task is to deal with the two questions of oil and the relationship between Europe and the United States.

5 pm

Mr. J. Enoch Powell: Right hon. and hon. Members knew when they read their morning newspapers that they were to have the treat today of listening to the right hon. Member for Sidcup (Mr. Heath). That anticipation was heightened in the case of the right hon. Gentleman's former colleagues by his announcement that
the intellectual battle against monetarism has been won".
The right hon. Gentleman's former colleagues know that there was one certain way of sending him into a paroxysm of irritation and impatience; that is, to suggest that the major issues of politics are subject to and capable even of resolution by intellectual debate. The wilderness is a wonderful place.

Mr. John Evans: The right hon. Gentleman should know.

Mr. Powell: I bring the report from the same area which the right hon. Member for Sidcup now inhabits: the wilderness produces remarkable effects.
One intellectual contribution that the right hon. Gentleman brought—again today, as in his interview yesterday—occurred when he said that reflation is not the same as inflation. Of course, provided that "reflation" is defined as expansion of the economy, that is undeniable. Here the hon. Member for Winchester (Mr. Browne) was in error when he interrupted the right hon. Gentleman, because there have been long periods in history when there was economic expansion unaccompanied by inflation.
When we use the word "reflation", however, and when the right hon. Member for Sidcup used it today, we mean measures to be taken by the Government to stimulate the growth of the economy by increasing demand. The—dare I say?—intellectual question which the House has had to set itself constantly is whether those measures are reconcilable with the avoidance of inflation—massive inflation if the demand thus injected is massive.
If the right hon. Member for Sidcup will forgive me for saying so, on this matter he was disappointing. He gave no indication either of the method or of the extent of the creation of demand for which he was calling upon the Chancellor of the Exchequer. In this respect, he fell short of the standard set by the right hon. Member for Stepney and Poplar (Mr. Shore), who has been increasingly bold in coming forward with propositions sufficiently precise to be examined.
On the second day of this debate, the right hon. Member for Stepney and Poplar told the House just what he and his party believed to be necessary. It was an increase in expenditure or reduction in taxation of £9 billion. I must say that the right hon. Gentleman rivalled even the mandarins of the Treasury in the use of mirrors when he succeeded in sweating that sum down to £5½ billion for the consequent addition to the total borrowing requirement which would result.
Students of the right hon. Gentleman's speech will be aware that he has done a good deal of homework since the

disastrous economic debate at the end of last Session. The right hon. Gentleman knew that a certain question was liable to be asked to which on that occasion he had not been able to find a reply which totally satisfied him intellectually. This time, when the right hon. Gentleman was asked what was his reflationary mechanism, his answer would be that he would borrow, borrow, borrow. The £9 billion extra or the £5½ billion extra—the argument remains unaffected—is to be found by borrowing, borrowing, borrowing.
Out beyond that reply, however, the right hon. Gentleman knew there lay another question: borrow from whom? Did he mean borrow from the banks? No. The right hon. Gentleman knows the meaning of borrowing an additional £5½ billion from the banks. He does not set out to deny that the massive monetary infusion resulting from borrowing £5½ billion from the banks would be wildly inflationary. So that was not the right hon. Gentleman's answer.
The right hon. Gentleman did not go down that road—or rather, when he did, it was in a strange, nostalgic context. If the Opposition say that their mechanism would be to borrow £5½ billion extra from the banks, they have to explain how they will prevent the inflationary consequences which otherwise would follow. That was not spelt out very fully on this occasion in the right hon. Gentleman's speech. Still, there were a few words there—it was not even a whole sentence—
we shall invite our fellow countrymen to join with us in achieving … a programme".
It was the distilled essence, the last evaporation, the slightest possible allusion which could be made to what was once, and may be still, the policy of the Opposition—that degree of control or management of wages and prices which will enable £5½ billion worth of extra monetary demand to be brought into the economy, and yet not a wage or a price stir, but all go into stimulation of additional demand.
That was not the alternative answer, not the horn of the dilemma, which the right hon. Member for Stepney and Poplar chose last Wednesday. He chose the other: we shall borrow elsewhere than from the banks. The inquiry might then have arisen: shall we borrow, then, from those who are already lending, from those who are investing? Shall we pull lending away from the directions and the channels in which it is flowing at the moment, and direct it into the channels into which the Government decide that the £5½ billion or £9 billion shall flow?
Then comes another thought—one can almost see the speech writing itself. The thought strikes the right hon. Member for Stepney and Poplar: if so massive a sum is to be attracted from other channels of lending and lent to the Government, if all that volume of savings is to be diverted, what about interest rates?
This time, the right hon. Gentleman was equal to the challenge, or so it seemed. He said:
The idea that interest rates will be driven up seems to be based on the false notion that there is intense competition in the United Kingdom for capital funds … That"—
this is the essential novelty of the right hon. Gentleman's speech in this debate—
is true only to the extent that the Government have made it true by abolishing exchange controls and by allowing British capital … to pour across the Channel and the Atlantic to wherever their managers believe the largest return is available."—[Official Report,  10 March 1982; Vol. 19, c. 879–80.]
The right hon. Gentleman is correct when he says that there is a large capital deficit on our external account. One of the most interesting paragraphs in the Financial Statement and Budget Report occurs in page 23 where the forecast and the outturn in this are compared. The forecast was a capital outflow, a deficit on capital account, of £3 billion, but the provisional outturn—very provisional, as the asterisk beside the figure reminds us—is £8 billion. "There, " says the right hon. Member for Stepney and Poplar, "is the answer that I was looking for. That will be the answer to the right hon. Member for Down, South (Mr. Powell) when he raises the old question with me again. That is where I shall get the £5½ billion. I will stop it from going abroad."
I have bad news for the right hon. Gentleman. That figure, whatever it may prove to be, is the exact counterpart of the surplus on our current account. If it were reduced to zero, so would be the surplus on our current account. That is simple arithmetic. So the right hon. Gentleman is saying that he will remove the basis of all that industrial and commercial activity which is represented by the current surplus—mainly a surplus on visible and invisible trade—which this country is—dare I use the word—earning, on a scale which we had not anticipated.
The right hon. Gentleman is, therefore, kicking through his own goal. The notion that there is a stock of borrowable money which is inert, doing us no good, that would flow into the Government's hands at a lower rate of interest than they are offering at the moment if we could only control exports of goods and services, as well as capital, proves to be a mere illusion.
There was an enjoyable passage—at least, I enjoyed it, as, I think, did most hon. Members—in the same speech of the right hon. Gentleman, where he started from the legal maxim that
A man must be presumed to intend the natural … consequences of his conduct.
He then amused us with the simile of a man with a crowbar who cracked the skull of another individual and then said that he had not anticipated it would hurt. Such is the irony which attends upon the right hon. Gentleman that a few moments after he had amused the House with that simile he took a massive crowbar and brought it down with a sickening thud upon his own skull. He did so in a passage in which he drastically—I believe, successfully—refuted any suggestion, whether from the Government Benches or otherwise, that our unemployment predicament is in any way related to our lack of competitiveness.
I apologise for wearying the House by reminding it of the passage, but they are golden words. The right hon. Gentleman said:
If Conservative Members think that that—
having more surplus capacity than ever before recorded—
is peculiar to the people of Britain, if they think that it is a kind of retribution for enjoying the benefits of full employment and the gradual amelioration of circumstances that come from a welfare State; if they think that over the years the British people have suddenly become corrupt and lazy; how do they explain the fact that unemployment throughout the whole Western world has risen from 8 million to more than 24 million in the last six or seven years?"—[Official Report,  l0 March 1982; Vol. 19 c. 877.]
The logical demonstration of the right hon. Gentleman is impeccable. It is impossible, in the face of it, to assert that our predicament is due to our being uncompetitive, because to what is it then due elsewhere? We cannot all

be uncompetitive with one another: all these other countries with unemployment totalling 24 million—three times what it was a few years ago—cannot all be uncompetitive with one another. That is conceptually impossible. The right hon. Gentleman was right, and I am glad that he found a deft and effective means of dispelling this notion that if we could only become more competitive—for example, by reducing the amount of labour required to produce a given quantity of goods or services—and if only we could force up still further our current surplus on the balance of payments and, consequently. our capital deficit, all would be well in our world. Indeed, is there not a certain paradox in supposing that if we can find means drastically to diminish the labour required in order to meet, either directly or by exchange, our current requirements, we shall increase employment?
The right hon. Gentleman has done more for us than that with his devastating rhetorical question. He has put our predicament into the wider and broader perspective in which it really belongs. After all, here is a nation which for virtually the whole of our experience since the Second World War has by might and main endeavoured to maintain on its current trade not a balance but at any rate a deficit that was manageable. Suddenly, over two or three years, we find a revolution in our international trading position such that we have the embarrassment of a huge current surplus and a huge capital deficit. That alone must call for a reshaping and redistribution of effort inside this economy on a major scale.
Moreover, for years we have been told—I doubt whether there is an hon. Member who has not warned his constituents about this—of the inevitable consequences of the accelerating improvement of technology and of the new kinds of technology that were coming into being. After all that, did we really suppose that this would happen and yet the pattern of employment in this country remain unchanged? What has happened to us—

Mr. Shore: Once again, the right hon. Gentleman has played his part as the intellectual Lone Ranger coming to the aid of the devastated Government Benches—and indeed they need it. I seriously put to him the question that arises from his analysis so far. He seems to be suggesting that the major cause of recession in Britain is the fact that for the first time for a considerable time we are running a surplus on both current and capital accounts. If it was really the case that the origin of recession in this country and, indeed, the Western world was the fact that countries were running at a surplus, how on earth does he explain the fact that for decades on end both Germany and Japan ran substantial and major surpluses and at the same time sustained full and almost overfull employment in their societies?

Mr. Powell: I have no difficulty at all in answering that question. The economies of post-war Germany and Japan were built in an economic world in which they were driven, both by sentiment and economics, into the very necessity of world conquest by means of exports. Their economies were focused upon their experience in the last three decades. Ours was focused upon a very different background, and now the pattern of our trade—the pattern of what we have been doing—has suddenly become obsolete in a way that what Japan and Germany have been doing has not become obsolete.
The reason why is to be found largely, if not solely, in the fact that in the recent past we have become self-sufficient net in oil products.

Mr. Shore: This matter is so important that we should try as best we can to get it right. I do not fully understand the right hon. Gentleman's argument, because although there is a case for saying that we have been slow to adapt to new demands and to changes in our economy, as there is a case for saying that that is true of other economies, it is a fact that all the economies of the Western world, whether they are fast at adaptation or not, are suffering to a greater or lesser extent from what most of us consider to be an oil-induced recession—that is to say, major problems on their balance of payments, as a result of which unemployment in the OECD area has more than trebled in exactly seven years from 8 million to 24 million. If that is the case, surely the right hon. Gentleman must accept that there is a lack of effective demand not just in Britain, but in many other countries. Does the right hon. Gentleman not think that—

Mr. Speaker: Order. May I explain that almost everyone in the Chamber hopes to speak today. It is no good the Opposition Front Bench making noises at me when I have to deal with the House as a whole.

Mr. Shore: The right hon. Member for Down, South (Mr. Powell) asks the most interesting questions. Does he not agree that a more plausible explanation for the particular and relatively worse British performance is that our exchange rate has been allowed to go up and has been kept high at a time when our costs have risen extraordinarily rapidly?

Mr. Powell: I can suggest to the right hon. Gentleman an explanation for our special experience in the matter of our trading relationship with the outside world that is perhaps better than his suggestion of the freeing of the exchange rate. It is that in the period of what he calls the oil-induced recession our economy virtually alone has come to the position of being self-sufficient in oil. That is the justification for treating this factor in the case of the United Kingdom as being essentially separate from the experience of the industrial world in general, to which the right hon. Gentleman drew the House's attention.
If what we are experiencing is the result of deep-seated and wide-reaching causes, we should conclude not that there are no steps which can be taken, or refrained from, by Governments which would assist or might do damage, but that we have a duty to those whom we represent to place the phenomenon with which we are attempting to grapple in its true larger context, where the efforts that are possible and the resources that are available through political and governmental action are strictly limited in relation to the magnitude of the economic revolution that we face.
The Chancellor of the Exchequer can claim that he has eschewed evil and done limited good. In present circumstances, it is clearly irrational for this country to be taxing employment, to be rendering labour artificially dearer. The right hon. and learned Gentleman has at any rate begun to undo the harm that was done by the previous Adminstration in placing a swingeing tax on the employment of labour.
There is also the matter of interest rates. Here I agree with the right hon. Member for Sidcup that we need not be passive, certainly not passive internationally. I follow everything that the right hon. Gentleman said when he argued that we ought not simply to ditto whatever are the consequences of the domestic decisions of the United States. Interest rates have a real element as well as a fictitious element, and we maintain artificially high levels of interest rates in this country if the Government insist on maintaining too high a level of borrowing. Even the right hon. Member for Stepney and Poplar finds it impossible to escape that conculsion.
The Budget is difficult to compare in this respect with those of previous years, because of the transition from constant prices to a cash basis. So the only relevant comparisons we can make of the volume of borrowing are on the basis of the percentage of GDP. Those who have studied the small print in the Financial Statement—some of it is very small print indeed—will know that all sorts of qualifications attach to those percentages in table 8 of that document. Nevertheless, table 8 expresses a policy, and there is no doubt what that policy is. It is gradual and continuing compression of the total of public borrowing as a percentage of GDP. However the magnitudes have been assessed, or even misassessed, that remains the policy behind the Budget. In that respect also it is favourable, and not unfavourable, in a period of high unemployment, because it will tend to bring us back again towards more rational and historically normal real interest rates.
But when all that has been acknowledged, when we have asked for even more such medicine, still, if we are to be honest with the people of this country we have to say that the limits within which the Government can manipulate this country's predicament, without more than equivalent concomitant harm, are extremely narrow. The task of reaccommodating ourselves to a new world, as this country has so often shown itself able to do, can be achieved, in the end, only by the people of this country themselves—and by time.

Sir William Clark: It is always a pleasure to follow the right hon. Member for Down, South (Mr. Powell) and I thought that the right hon. Member for Stepney and Poplar (Mr. Shore) was a little unkind and inaccurate to suggest that the right hon. Gentleman was a Lone Ranger in supporting the Government's policies.
The right hon. Member for Down, South did an excellent job in demolishing the arguments of the right hon. Member for Stepney and Poplar and it would be a good idea for hon. Members on both sides to read the right hon. Gentleman's speech, because he clearly and lucidly explained that there is a connection between high borrowing and high interest rates.
I do not go along with the suggestion of my right hon. Friend the Member for Sidcup (Mr. Heath), good though it sounds, about the EEC discussing with the United States whether we can achieve a rapport on interest rates. I think that every hon. Member agrees that it is irritating to have to follow the high interest rates in America, but I do not understand how my right hon. Friend can believe that we will get unanimity within the OECD on those countries restricting their borrowing requirements, so that we have virtually the same capital requirements for borrowing.
However, like my right hon. Friend the Member for Sidcup, I welcome most provisions in the Budget. I shall


mention my one or two slight criticisms later, but I certainly welcome the reduction in the employers' national insurance surcharge. That surcharge is a tax on employment, which affects the competitiveness of our exports, and we should not allow the Opposition to forget that they introduced the tax. In those circumstances, I am delighted that it has come down.
Like other hon. Members, I am also delighted with the package that has been given to industry generally, particularly in the spheres of energy, construction and home improvements. I welcome, too, the fact that thresholds have been increased not only by the going rate of inflation but by two points above. I should have liked more, but, given the economic circumstances, this was probably not possible. By increasing the thresholds, the Chancellor has raised tax relief this year for the direct taxpayer by £1·5 billion. I am glad that this increase has been given.
There is much more to be done in the sphere of thresholds. The anomaly still exists, particularly at the lower levels, that it does not pay a person to go to work. The work of my hon. Friend the Member for Norfolk, North (Mr. Howell) in this area is most commendable. I believe that the Budget, in the long run, will help real jobs. The myth should be killed that the reason for the present level of unemployment lies at the door of the Government. Nothing is further from the truth. There is a world recession. It has been shown that unemployment in OECD countries has gone up by three times in the past six or seven years.
Some aspects of the Employment Protection Act 1975 have acted against employment by dissuading or discouraging employers from taking on staff. In the same category is the policy on redundancy payments, unfair dismissal and—dare I mention it?—the exorbitant cost, in many instances, of the Health and Safety at Work etc Act 1974. The trade union movement cannot be exonerated from creating some unemployment. Restrictive practices that still exist militate against our competitive position. They prevent us from making goods and products that could be sold abroad. If not sold abroad, such goods could act as import substitutions.

Mr. John Townend: Will my hon. Friend add to his list, with which I agree, wages councils?

Sir William Clark: Yes. I did not wish to take the steam out of the speech on wages councils that my hon. Friend will doubtless make. I agree with him that these quangos have done more harm than good over the years.
Unemployment must also have been affected by frivolous strikes. One has only to consider the steel industry where strikes have led to lost orders and subsequent redundancies. The same is true of British Leyland. I have no doubt that the same will happen where ASLEF is concerned. I am delighted to see that many rank and file trade unionists do not always follow their leadership. Some trade union leaders seem to have a death wish over employment. What trade unionists must realise is that our own jobs must be protected. There is no point in pursuing restrictive practices if this means that our products are uncompetitive with those of overseas competitors.
I wish to refer briefly to public expenditure. There are two ways to make money. The first is to increase one's revenue. The other is to decrease one's expenditure. A

little progress has been made but the reduction in public expenditure must be accelerated. One has only to consider the overmanning that exists, for example, in the National Health Service where the number employed in the 20 years from 1960 to 1980 went up from 565, 000 to 1, 228, 000. Over that period, the number of nurses practically doubled.
A statistic that I should like to bring to the notice of my right hon. and learned Friend the Chancellor is that between 1970 and 1980 the population of this country increased by 488, 000. During that same period, the number of people who joined the staff of the National Health Service increased by 487, 000. The overmanning in our public services is far too great. If redundancies cannot be avoided, there should certainly be a cut in recruitment. I congratulate the Government on a reduction of 57, 000 in the number of civil servants. However, during the same period, the numbers employed in the National Health Service have gone up by 67, 000. On balance, the taxpayer has taken on an added burden in the public sector.

Mr. Hugh Dykes: My right hon. Friend the Prime Minister has referred to a recent increase in the number of nurses, saying, as I think all hon. Members agree, that this is good. Does my hon. Friend agree? Or would he have liked to see a reduction in the number of nurses as well as other employees?

Sir William Clark: My hon. Friend misses the point. Some of the 67, 000 are nurses but many are administrators and ancillary workers. One has only to enter any large hospital to see the amount of spare capacity, especially of ancillary workers. A weakness exists in the control of our economy and national finances. There should be a Minister of finance in the main spending Departments responsible to the Chancellor of the Exchequer. Sir Derek Rayner is doing a first-class job but he has only touched the periphery of the problem. There is need for someone to carry out the task the whole time.
I welcome the fact that the Government are accelerating the privatisation of nationalised industries. I would like to see even faster progress. It is probably the fault of successive Governments that work in the public sector has been made far too attractive. In many cases, the public sector occupies a monopoly position. There is job security and indexed pensions, which are completely and utterly disastrous, with good hours, good holidays and good sick pay.
There is, of course, need for a public sector, but care must be taken to ensure that two nations are not created. Those who work in the public sector are free of the pressures of economic circumstances, particularly in times of recession. They are more or less immune, whereas those in the private sector, especially in the last two or three years, have suffered redundancies and job losses.
Like my right hon. Friend the Member for Sidcup, I welcome the incentive to the private sector—the start-up scheme, the loan guarantee scheme and the enterprise zones. I am glad that the Budget emphasis, apart from the threshold of the allowances, is geared towards private industry. My main criticism arises out of the public sector borrowing requirement, which next year will be £9·5 billion. Last year, the Government issued £1 billion of index-linked bonds restricted to the pension funds. The £1 billion was taken up. A second issue was made and again the £1 billion was taken up by the pension funds. The


Government then put up a £750 million issue of the index-linked bonds of which, I understand, some 60 per cent. was left with the underwriters.
My right hon. and learned Friend now says that index-linked bonds are available to everybody. We should examine the arithmetic and the economic effects of that. I understand that the Government issue a bond and guarantee a true rate of interest. If a £100 bond is issued with a 2 per cent. inflation-proof interest rate, after one year, if inflation is running at 10 per cent., 2·2 per cent. interest will be paid. At the end of that year, the bond will be worth £110 and, at the end of the second year, under a flat rate of inflation, it will be worth £121. At the end of 10 years, it will be worth about £236. I do not object to that.
In the meantime, the Government will have been paying the 2 per cent. or 2·4 per cent.—whatever the index-linked rate is. At the end of the tenth year, the taxpayer has to pay back £236, having borrowed £100. That means that £136 must be paid back in interest. Over the 10 years, the Government should reserve at least £13 or £14 a year so that the money can be paid back.
The national debt is growing. It is now about £120 billion and the interest on it is about £15 billion. Overnight, one could reduce the interest charge to about £3 billion on a 2½ per cent. coupon and index-link the whole of the national debt. Obviously, that would be disastrous.

Mr. Chris Patten: Is my hon. Friend also against inflation-proofing capital gains?

Sir William Clark: No. There is a difference in the indexation of capital gains. If one buys something for £100 and it is worth £200 eight years later, that will not be worth as much as the original £100. It will be worth probably only £60. That is quite different from the indexed-linked bond.
The Chancellor of the Exchequer says that he will keep the rate of inflation down and that consequently there will be a good deal for the taxpayer. How can my right hon. and learned Friend guarantee the management of the economy over the next few years? It is easy to say that a sum can be raised by index-linked bonds. The right hon. Member for Down, South talked of £5½ billion. It is easy to say that that can be reduced more. Anybody can introduce a reflationary, inflationary Budget at any time. If index-linked bonds continue, the Government will hold people's savings more and more. I think that that is bad for any Government.

The Economic Secretary to the Treasury (Mr. Jock Bruce-Gardyne): My hon. Friend has made a powerful case. If the alternative be either the issue of index-linked bonds or the issuing of long-term conventional gilts on current or recent high rates of interest, is not it at least arguable that future Governments will have a greater reward for perpetuating inflation under a system of conventional gilts and a greater penalty for perpetuating inflation under a system of index-linked gilts?

Sir William Clark: Exactly. But I do not go along with that. What about short-dated gilts? The interest rate today is 13 per cent. It will come down, and there will be an issue of two-year or one-year bonds. The taxpayer is stuck with that rate of interest for two years.
I am saying that there is a danger. We already have one albatross around our necks—index-linked pensions. This will be a further albatross and a far greater burden. The Government should think again. It is no good saying that with prudent management we can contain inflation, because we may not always have prudent management.
Index-linked pensions are a stopper on the acceleration of the privatisation of nationalised industries. One has only to remember the recent sale of the National Freight Company, which I welcomed. The taxpayer received £53 million from that, but he has to pay £47 million back in pensions. What does the taxpayer gain? I beg my right hon. and learned Friend to think again.
No Government should defer payment of interest on the national debt. We have been asked whether it is better to pay a high rate of interest than to index-link. I think that it is better to pay a high rate of interest. That would bring the Government to face the facts of life, because they would have to find the interest. If a stock is issued tomorrow at 13 per cent., somebody has to pay that interest. It must be a charge on the Revenue. What is the £15 billion in the Red Book for if it is not for interest? Next year it will be more and the year after that even more. The Government are brought to face the facts of life if they cannot defer paying the cost of borrowing money.
I am sorry that I have spent so long on my criticism, but that was because I was interrupted. There is no question, even on this side of the House, but that the Budget has had a good reception here and in the country. It is not a give-away Budget, but it is not a standstill Budget. I am convinced that we are on the right road. The economic and other signs are good. The Government will help the improvement in the economy. I welcome that and congratulate my right hon. and learned Friend.

Mr. Douglas Jay: The hon. Member for Croydon, South (Sir W. Clark) gave some reasons why we are suffering from unemployment. The weakness of his argument is that all the factors that he mentioned were present as recently as 1966, when unemployment was under 1·5 per cent. He has not, therefore, hit upon the entire explanation.
The Chancellor's proposals will make little difference to the economy because, in spite of what the right hon. Member for Sidcup (Mr. Heath) said—and I agreed with much of what he said—they are based largely on the same old fallacies. I do not believe, and apparently the Government do not believe, that the Budget will even stop unemployment from rising. I should describe the Budget in the words of the Red Book as "Nil" or "Negligible."
Todays's unemployment is due not to some mysterious or unintelligible forces, as some propaganda has tried to persuade us, but to simple and unnecessary mistakes in economic policy which can be rectified. It is possible, in my view, to return to full employment in a few years, and to keep it there, if rational economic policies are followed. If that were not true, we would not have been able to maintain something like full employment for 25 years after the war and hold unemployment at barely 1·5 per cent. as recently as 1966.
We all agree that the oil cartel intensified the world cost inflation of 1973. But if anyone argues that that made full employment impossible in the 1980s, why is it that unemployment is now only 4·1 per cent. in Austria, 2·9 per cent. in Sweden and 1·9 per cent. in Norway,


compared with 11 per cent. or 12 per cent. in the United Kingdom? Therefore, those theoretical answers simply cannot be right.
The broad truth is that unemployment nowadays is caused by a failure to keep the flow of total money demand and money costs in some reasonable balance. If the flow of money demand is kept up to the level of money costs, high employment and high production will be maintained, whatever the population and, broadly speaking, whatever the state of technology. If demand falls well below that level, unemployment will rapidly increase. Indeed, that is what a recession is. It is not just a mysterious visitation from Heaven.
If total demand is deficient—this is what so many people neglect today—a certain proportion of the labour force are arithmetically bound to be unemployed, through no fault of their own in the great majority of cases. That is why, during the past two years, we have daily read about firms and factories closing down—from Linwood and Consett to Freddie Laker and the rest. Many of those enterprises would have been perfectly viable if reasonable economic policies had been followed. That is why we have an economy in which virtually nobody except the banks can make any profits at all.
In the last two years we have seen a world deflation of demand made more intense by an additional old-fashioned deliberate deflation in the United Kingdom, and now, in addition, in the United States of America. It is largely a re-run of the 1929–33 deflation, always associated with President Hoover in America and Dr. Brüning in Germany. Indeed, it has been accompanied by almost exactly the same muddled intellectual arguments, some of which we have heard today.
All the consequences of the new deflation here were perfectly predictable. I am not being wise after the event. In the debate on the Chancellor's first Budget of June 1979, my judgment—I quote only one sentence—was:
It will accelerate price inflation, increase unemployment and reduce production."—[Official Report,  18 June 1979; Vol. 968, c. 976.]
That is exactly what has happened in the last two years.
All this has been done in the name of checking what is called inflation. Of course, it is true that if excess demand in the economy is forcing up prices unnecessarily, it is sensible to siphon off that demand, as has often been done in Britain since the war. But to cut down demand still further, when there is a huge surplus of real capacity, is a self-defeating absurdity. It must be better to use all the real capacity that we have, whatever the effect on money values, because that must mean a higher real income for the community as a whole.
Since 1979 the Government have, at one and the same time, cut total money demand and failed to hold down money costs. The inevitable result is that we now have something like 20 per cent. of the real economy and of our real productive capacity unemployed. That means an annual loss of possible national income running at the rate of £40 billion to £50 billion per year. That is vastly greater than all the variations of the PSBR and the detailed rises and falls in taxation.
Ministers say that we cannot afford more houses, better education, electrification or more naval escort ships, or whatever, without sacrificing something else. With unused capacity, however, that is untrue. Having more of one thing does not mean sacrificing something else if there is real productive capacity unemployed.
Of all the fallacies that make up the Prime Minister's rather schoolgirl economics, the most absurd is the question "Where will the money for expansion come from?" I shall give my answer to that question. Some of it—in spite of what the right hon. Member for Down, South (Mr. Powell) said—will come from the billions of pounds now leaking into refuge overseas. If the right hon. Member for Down, South thinks it over, I think he will find that the weak point in his statistical argument was that he forgot the gold reserve. However, I shall not pursue that further this afternoon.
Even more of the money will come from the £12 billion or £15 billion that we are now spending in paying people to do nothing—the total cost of unemployment. As those people are put to work building houses, restoring investment, public or private, improving our defence equipment, and so on, the money will then come from the increased national income, real and monetary, which that increased activity will inevitably generate.
In the next round of reflation, the growing incomes of those finding work will themselves generate new savings, new Budget revenue and new demand for industrial products. It is because reflation works in that way that, like deflation, it is cumulative, although in the opposite direction. It soon finances itself, as the post-1932 reflation and any number of successful reflations since, including that of 1977–78, clearly prove. But one first has to start the process. One first has to "prime the pump", as we used to say when these things were rather better understood than they are today.
Deflations do not stop automatically while, like the Chancellor of the Exchequer, we just watch and pray. The Great Depression did not end in the United States in 1933 until Roosevelt completely reversed the deflationary policies previously followed. Deflation did not end here until Mr. Neville Chamberlain, as the right hon. Member for Sidcup rightly pointed out, reduced interest rates in the summer of 1932 to 3½ per cent. and, incidentally, put a general 10 per cent. tariff on all manufactured imports. If the Prime Minister would do today just the two things that Neville Chamberlain did 50 years ago, the situation would be transformed.
There are two other myths that have to be eradicated from the minds of the Prime Minister and the Chancellor of the Exchequer. First, it is not true to say that we cannot cut interest rates and expand investment at the same time. The Prime Minister seems to think that there is a pile of money locked up somewhere in a safe or a stocking or something of that kind. The truth is that, as production expands, incomes and savings and revenue will be increased, and the quantity of money can then also be perfectly safely expanded. Interest rates can be brought down—as they were after 1932 for a series of years—with expansionary results on the whole economy.
People seem to forget history altogether. The whole experience from 1939 to 1951—if not to 1960—shows that interest rates do not have to be left to be determined by market forces. Of course, it is true that if they are left to be determined by market forces, they will be determined by market forces.
The right hon. Member for Sidcup, in rightly saying that it is absurd to make us wholly dependent on the United States' interest rates, did not draw the obvious logical inference that it was the gratuitous folly of the Government in throwing away exchange control two years ago that made that situation very much worse.
The other myth which needs to be eradicated—I was glad to have the agreement of the Minister about it earlier today—is the belief that the so-called PSBR—which is really little more than a fetish in terms of serious economic argument—is the same thing as a Budget deficit. It is not. This year, as last year, we have a surplus of current revenue over current expenditure. The surplus figure this year is £8, 359 million—or nearly £8½ billion. Public capital expenditure this year will exceed the total of the PSBR by just under £7 billion. In point of fact, the PSBR is money borrowed to create lasting capital assets. That is a perfectly reasonable procedure to follow—one that private industry follows and one that has very little crucial significance for the economy as a whole.
Although none of these are the real problems of inflation, there is a real problem. That is the prospect of what started the whole cycle and what the Government have done nothing to solve—the problem of cost-inflation. The real change since the successful full employment policies of the 1950s and 1960s is the growing power of organised groups in our economy, and those of other countries, to escalate pay settlements far above any possible rise in output, as we learnt in 1975–76.
But this exposes another crucial weakness of the deflationary solution. It is sometimes assumed by Conservative Members that when the deflation is relaxed—and it now seems to be gently relaxed—all will be well ever afterwards. But, of course, it will not. As soon as the economy picks up, if there is no control or restraint over money incomes, cost-inflation will start all over again. All the sacrifices and suffering, after a short time, will have been borne for nothing. It is the deflationary solution, not the reflationary one, that is short-sighted and merely postpones the problem until a year or two later.
For these reasons a successful, sustained reflation must include measures—little though we may like it—for restraining pay inflation. That may involve in time a complete reform of our present methods of pay settlements which are neither modern nor up to date. If West Germany Austria, Norway, Sweden and other countries can solve this, I do not believe that it is impractical in this country. However—and here is a note of hope—in the early stages of reflation in this country, so much real capacity is now unemployed that this part of the problem should not be so acute at the start of recovery.
The crying need, therefore, is to expand both investment and current demand at once, bring interest rates right down—as was done in 1932—ease both budgetary and banking policies; let the exchange rate fall; and let us pay people to work instead of paying them to do nothing.
Every month of further deflation and waste is doing further permanent damage to our national economy. Huge damage has been done in the past three years through intellectural muddle, political folly and a dash of partisan self-interest. Even worse could follow if unemployment rises much further. If we want to get rid, as I hope we do, of the nasty signs of extremism that are emerging in some parts of the country because of the level of unemployment, the first job is to get rid of the bunch of befuddled extremists now sitting on the Treasury Bench.

Mr. Julian Amery: I have always had the greatest respect for the right hon. Member for Battersea, North (Mr. Jay) over all the years that we have sat together in the House, but when he says that the problem of unemployment could be simply solved by good management I must beg to differ with him. There is a structural problem here, about which I shall have something to say later. The right hon. Gentleman advanced some statistics about Austria and Norway, which may have some relevance to the problem, but the statistics for Germany and Switzerland show that their problems are not so very different from ours. Had the Germans not repatriated some 2 million Turks and Yugoslays, their unemployment would be not 2 million but 4 million. The Swiss in proportion have had the same sort of problem that we have, and solved it like the Germans.
In pleading for lower interest rates, the right hon. Gentleman gave support to my right hon. Friend the Member for Sidcup (Mr. Heath) in what he said about Mr. Neville Chamberlain's action. But Mr. Chamberlain was acting against the background of zero inflation. If I were asked to lend my money today, if I had any, I would want 2½ per cent. above the rate of inflation and so, I dare say, would the right hon. Member for Battersea, North, if he has any to lend. We would not have the same factors that Neville Chamberlain had unless inflation had first been brought under control.
I agree with my right hon. Friend the Member for Sidcup that there is no reason why our interest rates should be tied to American interest rates, because interest rates are determined only partly by competition—what is available in the New York market—but also by the rate of inflation at home. German, Swiss, Austrian and Japanese interest rates are considerably lower than ours because their inflation is considerably lower than ours. There is a balance to be struck between the attraction of what one can earn in New York and what one could get here if our inflation rate were lower.
I have had the feeling both in the debate and in the discussions surrounding it that there has been a sort of smell of Sotheby's or a tang of Christies. The economy has been up for auction. My right hon. and learned Friend the Chancellor put in a reserve bid of £1·5 billion. That was not too bad. The SDP and the Liberal Party were a little uncertain. The right hon. Member for Crosby (Mrs. Williams) had said £6 billion in a speech before the Budget. From reading the speech by the right hon. Member for Orkney and Shetland (Mr. Grimond), it looked to be more like £2 billion or £3 billion. The TUC put in a bid for £8·3 billion. The right hon. Member for Stepney and Poplar (Mr. Shore) put in a bid for £9 billion, which was backed up by a powerful article by the Leader of the Opposition in the News of the World yesterday. My hon. Friend the Member for Enfield, North (Mr. Eggar) put in a bid for £10·5 billion to £11 billion. The evening is still young. Any advance on £11 billion? Cannot we have something better?
What we must do is examine the credibility of these proposals. My right hon. and learned Friend the Chancellor has achieved a remarkable acceptance for his Budget among Conservative Members. There is an argument as to whether or not he is still a monetarist. These are theological arguments into which I do not care to enter, and as he has satisfied both my right hon. Friend


the Member for Sidcup and my right hon. Friend the Member for Worthing (Mr. Higgins), and orthodoxy and heresy have been reconciled, who am I to quarrel? The essential point is that this is still an anti-inflationary Budget. Defeat of inflation is the key. Unless we bring down inflation, interest rates will not come down, and until interest rates are brought down there will not be enough investment.
I shall not delay the House long by commenting on the views put forward by the Liberal-SDP alliance. They seem, naturally, to want to outbid the Chancellor a little. I can understand that, but, on the other hand, they seem to recognise that even if the Chancellor had gone as far as they wanted him to, there would have to be some sort of incomes policy. I am not against that in principle. I served in the Government of my right hon. Friend the Member for Sidcup, when there was an incomes policy. Until the oil crisis, it worked, up to a point, fairly well, but we have had three goes at a policy such as that and the experience has not been altogether happy. The SDP and the Liberals must be cautious, with a former Chancellor of the Exchequer stomping the hustings in Glasgow. I have a feeling that if Mr. Jenkins were back in 11 Downing Street, the Budget that he would produce would not be so very different from that of my right hon. and learned Friend.
Then there was my right hon. Friend the Member for Chesham and Amersham (Sir I. Gilmour)—the very word rings like a bell. He wanted to increase the public sector borrowing requirement by two thirds, but he did not tell us how he would do that. Unlike the alliance, he did not have an incomes policy. His policy gave some credence to the criticism made by my hon. Friend the Member for Mid-Bedfordshire (Mr. Hastings), that perhaps he thought that we could get in the votes before the inflationary effect caught up at the election.
The serious alternative policy was suggested by the right hon. Member for Stepney and Poplar. There was some equivocation, as the right hon. Member for Down, South (Mr. Powell) said, between his £9 billion and £5½ billion, but he proposed to increase public expenditure by £9 billion. How did he intend to finance it? By taxation? If so, whether it meant taxation on companies or individuals, presumably it would reduce the amount of money that was available for investment. He would take money out of the potentially wealth-creating sector and spend it on desirable, but not productive, social services.
Would the right hon. Gentleman finance it by borrowing? That would, inevitably, drive up interest rates. It is absurd to pretend that with a limited amount of money available one can go on borrowing without having to pay more to the potential lender than one is paying today.
Would the right hon. Gentleman do it by printing? There was another Duke of Devonshire who said that he would not countenance any tampering with the fiduciary issue. Perhaps we should remind the present Duke of that. Clearly it would have an immediate inflationary effect, and to that extent would therefore discourage investment and encourage the export of money.
Whichever line was adopted, the programme that was advanced by the right hon. Member for Stepney and Poplar was plainly reflationary. The pretext on which he justified it—I shall come to the real reason later—was that unemployment was worse than inflation. That was the implication. We should consider that. Is he right? Clearly 55 million people are hit by inflation, of whom 10 million

are retired people with few means of improving their welfare. Then there are 3 million unemployed, of whom fewer than 1 million are unemployed for more than a year.
Inflation is a tax. We all know that. Indeed, those who have been Members of this House for long enough have all been guilty of it. We have allowed wages to go up, knowing very well that if prices rose we would claw back with one hand the money that was given with the other.
Then there is the statement that is clear to me, and it was certainly clear to the last two Labour Prime Ministers, that inflation produced unemployment.

Mr. Robert Sheldon: It does not.

Mr. Amery: That is what they said. It seems to be so, because it drives up interest rates, makes production less competitive, and the result appears to be unemployment.
The right hon. Member for Stepney and Poplar knows all that very well. He knows that his programme would only be tenable, even for six months—he admitted as much, bit by bit, in this debate and in previous debates—if he introduced exchange controls, import controls—to get us out of the European Community—a prices policy, and an incomes policy. It would be a siege economy. We have had some experience of that. We had a siege economy in 1940, and again after 1945. The right hon. Member for Battersea, North will remember the second. We were rescued from the first by lend-lease, and from the second by Marshall Aid. The East European countries have gone in for it, with results that are plain for all to see. M. Mitterrand's Government have already anticipated the dangers of what could come from their full programme, and the President has put a clamp on extending the deficit.
The only successful experience of a siege economy—it was very short-lived—was that of Nazi Germany in getting out of unemployment and into the war. I do not wish to draw a comparison between the right hon. Member for Stepney and Poplar and the late Reich Chancellor, although they both have a lock of hair hanging over their foreheads.
It would be difficult, but possible, to do what my right hon. Friend the Member for Sidcup suggested, and that is to have a European system like the old Commonwealth system. However, that would not be easy with $1½ trillion in Euro-currency floating about. The French are finding that out at present.
Thus, the right hon. Member for Stepney and Poplar offers the only serious alternative to what my right hon. and learned Friend the Chancellor of the Exchequer proposed. It would not beat inflation, although it might suppress it. It would not cure unemployment, although it might, as in Russia and other East European countries, keep overmanning going in the factories. However, it implies regulation on an unacceptable scale, and impoverishment such as our people would not accept. Nevertheless, it is a serious attempt to deal with the problem of unemployment.
That brings me to what we are doing about unemployment. The Government have embarked on the right course for the immediate future. The key to the problem is higher productivity, which calls for investment on the one side, and better industrial relations on the other side. To get investment, we must beat inflation. We cannot have cheap money unless we beat inflation. That is what my right hon. and learned Friend is trying to do.
Whether he will succeed will depend in great measure on how far he succeeds in containing public expenditure, and, I hope, cutting it.
I strongly support what my right hon. Friend the Secretary of State for Employment is trying to do about industrial relations. However, I urge him to add to his negative measures, which are necessary, some positive measures in the direction of what in Germany is called co-determination. I have been talking about that since 1948, as has the Liberal Party since soon after that. It is time that we got on with the job. I have had very little success, except in the second 1974 election manifesto, which contained far-reaching proposals in that direction, but which, for some reason or other, got lost somewhere in the process.
The Government are on the right lines in trying to tackle unemployment, but—here I disagree fundamentally with the right hon. Member for Battersea, North—we shall not get back to full employment just by good management. There is a structural problem. The recession has taught employers, in both the public and the private sectors, that they can get along very much better than they thought with very much less manpower. Meanwhile, the robot and the automaton are coming along, and, with modern machinery, there will be less demand for directly employed labour in the wealth-creating sector.
Thus we are faced with the problem: shall we have massive unemployment as the only condition of more successful growth, or can we find a way of adapting ourselves to the machine? The machine is worth installing only if it works all day. It must be ruthlessly exploited. However, it can be a marvellous worker as it does not strike or vote. Therefore, we have a considerable instrument at our disposal. The machine could work three eight-hour shifts, four six-hour shifts, or six four-hour shifts. Between them, the management and work force could decide whether they wanted high wages or more leisure.
Of course, it will be said that the machine would involve working unsocial hours. However, many people have worked unsocial hours for years. The steel blast furnaces and the railways have been kept going for years in that way, and so have we in this House. If it becomes necessary for the wealth-creating sector to work 24 hours a day—the sector, not the people—the others must do their best to help. In the pyramid of our society half of the people are resting or learning and are not working. Of the other half, one half is creating wealth and the other half is distributing it. Therefore, 25 per cent. of the country carries the burden for the others. Therefore, we must cater for them. If those people finish their shift at 3 am or 4 am, there must be facilities for them. The pubs must be open and television companies must broadcast.

Mr. J. Grimond: The right hon. Gentleman has made an extremely important point, with which I very much agree. He hopes for more flexibility in industry. "Co-determination" is a felicitous phrase. However, should not the Government do more to encourage it? There are many obstacles to co-determination, which Governments have not removed.

Mr. Amery: I could not agree more with the right hon. Gentleman. I made my remarks in the hope of adding—as I have so often in the past—another little jab in that

direction. Alas, it was late in the day that that idea eventually met with the support of my right hon. Friend the Member for Sidcup.
We must emulate the society that is coming into existence in America and Japan. In that society, shops, banks, cafes, restaurants sports grounds are open 24 hours a day. That society will not be established immediately, but when it is reached there will be a shortage of employees and we shall once more have to import labour. There is an opportunity for full employment and ample leisure. It offers a much more satisfactory perspective than that offered by the right hon. Member for Stepney and Poplar. He offers a regulated, East European type of economy.
But, I admit, my theory calls for a revolutionary change in attitude on the part of individuals. Today's unemployment is not due to the Government's policies. It is mainly due to the recession, but it is also largely due to the fact that there has been gross overmanning. For years, we failed to invest in the most modern machinery. Gradually, as we began to invest, the demand for labour changed. Unemployment is a symptom of the technological revolution and not a result of admininstrative decisions. It is a challenge to which none of the three parties has yet sufficiently given its mind.

Mrs. Shirley Williams: The right hon. Member for Brighton, Pavilion (Mr. Amery) had a considerable interest in suggesting that there were only two economic choices before the House. He suggested that one option was the policy pursued by his right hon. and learned Friend the Chancellor of the Exhequer and that the other was that pursued by the right hon. Member for Stepney and Poplar (Mr. Shore). However, the simple truth is that Government after Government in the world have policies that resemble neither of those and are substantially more successful than the United Kingdom in terms of employment, inflation and the economy.
Therefore, I do not accept the basic proposition that the only two approaches are those set out by the Chancellor of the Exchequer and by the right hon. Member for Stepney and Poplar.
It would be churlish not to welcome some aspects of the Budget. It is right and fair to pay tribute to the Government's incentives for small business, to their increased grants for home improvements, to their measures to help energy conservation, to the measures to clear up derelict land and to some of the new incentives given to those who wish to start their own businesses. However, the Government should seriously consider some of the regulations that still make the approach difficult for many small businesses, despite the fact that the Government are trying to make grants more readily available. We complain only about insufficient resources for those new approaches and not about the new approaches themselves. Indeed, many of them have much in common with what the Liberal and Social Democratic Parties have been saying.
The Secretary of State for Industry should give us some answers, because this is the last night of the Budget debate, and today's subject matter includes, in particular, industry. Perhaps the Chief Secretary will be kind enough to convey my questions to the Secretary of State. What are the right hon. Gentleman's proposals for the future of British Telecom? To a great extent, Britain's industrial


future will be based on that industry. Do the Government intend to sell off a large part of British Telecom's present holdings? Will they insist on retaining a monopoly on the trunk network of telecommunication links? What is the Government's view about the speed at which optic fibres can be introduced in Britain? That offers a great opportunity for the creation of employment and for jumping over many of our competitors. Many hon. Members recognise that the structure of British Telecom and its relationship to the private market is crucial to the question of how fast Britain can adapt to that new technology. The Social Democratic Party regrets the report in the Sunday newspapers that there is no intention to go ahead with the so-called Buzby raising of equity for British Telecom's modernisation. Perhaps the Minister will let us know the Government's proposals.

Mr. Renton: Surely the right hon. Lady is mistaken in her comments about the Sunday press. The press said that the Buzby bond—which is a type of participating preference share—might be scrapped in favour of the public directly being able to buy equity in British Telecom, which is a much more advanced step. As a representative of the SDP, does the right hon. Lady favour the public being able to buy equity in British Telecom?

Mrs. Williams: The SDP favours the concept of partnership between the public and private sectors. However, we should want to know where control over the basic telecommunications network would lie. It should lie, where it lies now, with British Telecom.
The Budget contains two significant elements. First, there has been a consistent move towards an increasing share of the financing of public expenditure by the everage taxpayer and below, at the cost of giving greater concessions to those earning five or more times the everage income. The central criticism has also been made by my hon. Friend the Member for Gateshead, West (Mr. Horam). At the last election, the Conservative Party manifesto stated:
We shall cut income tax at all levels to reward hard work.
We have every right to include within the definition of "income tax" national insurance contributions. On that basis, that statement has not been borne out in any year since the Conservative Party was returned to office. Indeed, in every year the burden of income tax and national insurance, taken together, has grown upon the average taxpayer and the below-average taxpayer. After some dispute about table 9, which was so unwisely made available to the House by the Treasury, it is now clear that that process will continue in 1981–82.
The Economist in its current issue stated:
Sir Geoffrey has produced what his party thinks is a popular budget while also kicking most people in the teeth.
That criticism was made by The Economist,  not by me.
The second substantial charge against the Budget is that it does nothing to reduce unemployment. I wish not to go over arguments that have been put before the House in debate after debate, but to raise a fresh issue. The Government expect the increase in output in the coming year to be 1·5 per cent. The Government draw attention to the fact that the increase in individual productivity is between 2·5 per cent. and 3 per cent. and take great credit for that, although the increase is no different from the increase in 1967–68 when there was also a substantial increase in individual productivity or, for that matter, in 1972–73 when there was a similar phenomenon. It often

goes with a society that is slowly moving out of a severe recession. If those levels of individual productivity are sustained next year, we are undoubtedly looking at yet another reason to believe that unemployment will increase.
It troubles me that the Government are heading towards a year in which they announce their intention to maintain real wage increases at about 4 per cent.—the figure that they have given to the public sector. For junior civil servants the Government propose a much lower wage increase.

Mr. Tony Marlow: Is not the right hon. Lady talking about money wages?

Mrs. Williams: If the increase in money wages is 4 per cent. for the public sector and 1 per cent. for junior civil servants, the Government must at least be as aware as the rest of the House that it means that the poverty trap will widen still more. If unemployment benefit is indexed, however meanly, to the minimum level possible—the rate of money inflation—and if at the same time the Goverment are pursuing the policy of increases in money wages at less than the inflation rate, the two will come more and more together. That is why the Goverment are being driven towards a series of expedients which makes the burden of unemployment more and more painful. The combination of the expedients of abandoning the earnings-related supplement, of taxing unemployment benefit and of taking housing out of the estimates for supplementary benefit, as we know from the most recent Budget arrangements, will bring about a greater fall in the real standard of the unemployed than any other group in society.

Mr. Robert Sheldon: Mr. Roy Jenkins has said that the alliance does not believe in the principle of full employment as stated by Beveridge. Does the right hon. Lady agree with that? The Financial Times of 23 February stated:
I do not believe that an alliance Government could immediately assume responsibility for the maintenance of a high and stable level of employment in line with the famous Beveridge principle of 1944.

Mrs. Williams: I am glad that the right hon. Gentleman read out the full report, because the crucial word is "immediately". I shall come to what the Labour Party is proposing in a moment, but the alliance believes that it would completely mislead the electorate to suggest that we could return immediately to full employment. It is neither right nor fair to mislead the electorate in that way.

Mr. Sheldon: Just put it another way.

Mrs. Williams: It is not fair to mislead the electorate in the way that the Labour Party is now misleading it or in the way that the Government are misleading it by suggesting that the Budget will make people better off when in fact it is making the great majority of people worse off.

Mr. Sheldon: rose—

Mrs. Williams: I have already given way once. I wish to pursue my argument with the Government for the time being.
As the standard of living of the unemployed is steadily growing worse and as the numbers of unemployed increase, have the Government considered what steps they


can take to alleviate the depth of despair among the long-term unemployed? I say to the right hon. Member for Pavilion that the number of long-term unemployed is expected to be one-third of the total unemployed by the end of this year. Long-term unemployment steadily grows as overall unemployment grows, for obvious reasons.
When the Government came forward with their strange and essentially cosmetic scheme for taking 100, 000 people off the unemployment rolls at a cost of £150 million, had they consulted the Manpower Services Commission about the possibility of using administrative machinery that is already in place in order to double the community enterprise scheme as quickly as possible? We know that the MSC has the machinery for doing that and we know that it has the relationships with the local authorities and voluntary organisations. We know that the scheme is working and is successful. One is bound, therefore, to ask why the Government have pursued a scheme for which there is no structure when it is unlikely that a scheme could be created sufficiently quickly to take 100, 000 people off the unemployment rolls.
I add to that two further matters. It is clear from the Government's proposals that the misery will deepen in 1982–83. The Government plan an 8·5 per cent. increase in public expenditure in the current year to be followed by a 5 per cent. increase in 1983–84—well below the rate of inflation. That implies directly that there will be more agonising discussions within the Government this autumn about how they can make a further range of expenditure cuts. The present cuts are directed at housing, education and health and are exempted for defence and social security only because expenditure on unemployment is so massively high at £14 billion a year.
The Secretary of State for Industry rather surprisingly referred to the levels of capital investment. Yet, according to his public expenditure White Paper, public sector capital investment fell by 31 per cent. in the current year and is expected to fall by a further 6·5 per cent. next year. Clearly the right hon. Gentleman picked on the figures for the nationalised industries and therefore escaped giving the overall picture, which is one of a continuing decline in capital investment in the public sector for the next one and a half years.
It was a rather sad joke that the Secretary of State for the Environment was quoted in the newspapers on Saturday morning as saying that local authorities should spend, spend and spend again, when it is well known that they have raided their capital investment budgets in a desperate attempt to make up their revenue budgets and are now facing further cuts in the rate support grant.
One must ask what all this is for. What is all the agony about? There will be a 1·5 per cent. rate of growth in the current year. There is already a 0·4 per cent. drop in industrial production in January, which may be due to the weather but, equally, may not. Inflation has hardly changed from where it was three years ago. Competitivity is so low that the Government reckon on a 9·5 per cent. increase in imports to go along with the 1·5 per cent. increase in growth. The bottlenecks of supplies, skilled labour and raw materials are still there and will be run into rapidly if there is any recovery.
It is sad that, in the light of all those facts, the "wets" should have pulled down their flags and left the field. The reasons for that argument appear to be based on the

touching loyalty, for little reason, that was associated with the Light Brigade. The right hon. Member for Pavilion referred to the right hon. Member for Chesham and Amersham (Sir I. Gilmour) as being a bell. He might well be described as a somewhat muffled bell on this occasion, having accepted that the Budget is basically a reflationary measure. Surely no one could argue that in the light of the changes in the burden of taxation, the levels of growth and the rapid decline in investment to which I have already referred.
The right hon. Member for Pavilion said that there is only one serious alternative before the House. That was a reference to the eloquent speech of the right hon. Member for Stepney and Poplar on Wednesday of last week following the Chancellor of the Exchequer's Budget Statement. The right hon. Gentleman argued that the Budget would do nothing to reduce the levels of unemployment and was unlikely to do anything serious about them. However, the right hon. Gentleman knows that there are two great holes in his argument. The first hole was pointed to by the right hon. Member for Battersea, North (Mr. Jay), when he said honestly that one of the reasons why inflation begins so much earlier nowadays in any period of recovery than it did in the 1950s and 1960s is that the groups that are organised to take advantage of any inflationary pressure to press up the level of money wages are much better organised than they used to be.
The right hon. Member for Battersea, North said in terms—I noted what he said—that that increased pressure meant that there has to be an incomes policy as the centrepiece of any policy of reflation such as that advanced by his right hon. Friend the Member for Stepney and Poplar. His right hon. Friend has not used any terms as precise as that. He has referred to what he calls a national assessment of incomes. In so doing he has talked about something which is hard to define. I believe that the right hon. Gentleman hopes that little by little and by subtle measures he can turn that into a real incomes policy at some time between now and the next election.
The alliance stands clearly for an incomes policy and has said so. It has said that it stands for an incomes policy that, if necessary, is backed by fiscal powers to make it work. Everyone in the House knows that alliance Members have said that time and time again.

Mr. Patrick Jenkin: Has the right hon. Lady yet made up her mind whether the fiscal measures would be a tax on employers, as she advocated in her election address, or a tax on employees, as has been advocated by Mr. Roy Jenkins? They cannot both be right. The alliance policy is hopelessly confused on this issue.

Mrs. Williams: I must ask the right hon. Gentleman to give me the quotation, because I know nothing of it. Alliance Members have spoken frequently of an inflation tax that would be imposed upon employers. I do not know from where the right hon. Gentleman draws the second part of his remarks. It is clear that he has not read the speech of my right hon. Friend in Hillhead last week, during which he went into the general issue of economic policy in great detail.
I turn to the second major hole in the Opposition's case. No doubt they hope that the Government will distract me from drawing attention to it, but they will not succeed in doing so.

Sir William Clark: rose—

Mrs. Williams: I shall complete this thought first before giving way to the hon. Gentleman. The Leader of the Opposition and the hon. Member for Liverpool, Walton (Mr. Heffer) visited the Socialist and Social Democratic Parties in the European Parliament last month. The Opposition were told that there is not the slightest chance of getting trading arrangements with the Community equivalent to those that we now enjoy if Britain leaves the Community. They must surely know also that the change in trading patterns in the past nine years has emphasised time and again, whether we like it or not, the shift away from a pattern of dependence on Commonwealth countries to a pattern of dependence for the bulk of our export markets on the Community and its associated member States.
No less than 57 per cent. of our export trade now goes to the Community and its associates. It is clear that none of the associate States would leave if Britain left the Community. Nigeria, the Ivory Coast and all the rest would not leave their associated status, for the very good reason that they have derived great benefit from that status.
Where are the Opposition proposing to go?

Mr. Nigel Forman: To the East.

Mrs. Williams: Where are they to find their alternative markets when they erect the barriers round the United Kingdom? With which countries do they hope to trade when they put up the barriers? Do they hope to trade with the Soviet bloc or the United States? The latter would certainly retaliate against a siege economy. This is the central and major hole in the official Opposition's argument. Whatever the right hon. Members for Down, South (Mr. Powell) and Brighton, Pavilion may say in defence of it, the hole is so great that it makes nonsense of virtually all the Opposition's case.

Mr. Amery: I was not seeking to defend the speech of the shadow Chancellor of the Exchequer, the right hon. Member for Stepney and Poplar (Mr. Shore). I was saying that, so far as I could see, it was the only definite and clear alternative, although one that I consider to be profoundly misguided. I could find many other holes in it, including the absence of any reference to co-determination. I hoped that, by admitting that my right hon. Friend the Member for Sidcup (Mr. Heath) had accepted my ideas on co-determination, I should not do them any harm with my right hon. Friend the Prime Minister.

Mrs. Williams: I am delighted to say that on co-determination my right hon. and hon. Friends totally share the views of the right hon. Gentleman and always have. Many issues suggest that industrial relations are at the cote of what has gone wrong with the British economy and that they need to be dealt with other than by straightforward antagonistic legislation. That is a view that we share and— [Interruption.] Labour Members who are enjoying themselves shouting at me will know that the Social Democratic and Liberal Parties tabled an instruction to the House to introduce industrial consultation as a legislative requirement. That is central to the entire issue, and it is a tragedy that neither of the two old parties is seriously discussing it even now.
I accept that all that the Government have done has been directed to trying to create greater productivity,

including higher individual productivity, and a chance for us to move towards the new technologies. I accept that those are their intentions. However, they have failed to recognise the astonishing pressure that they are bringing to bear upon the social fabric. We cannot keep making the poor poorer. We cannot abide a situation in which, in the inner cities, 45 per cent. to 50 per cent. of young people under 24 years of age have no hope of employment. We cannot pull down the institutions which, as the right hon. Member for Salford, West (Mr. Orme) clearly said, offer the chance of Britain getting more technicians and technologists—those who might fuel and start the new industrial revolution about which the Secretary of State for Industry is so enthusiastic.

Mr. Reg Race: The right hon. Lady imposed cuts on the universities.

Mrs. Williams: No, I did not. The number of students was intended to increase by 5 per cent. over the following three years. The hon. Gentleman is talking a lot of rubbish.
The Government have not underpinned sufficiently their proposals for the future. They have not thought through their attitudes towards higher education, training, the extent to which they accept a public and private partnership, industrial relations and whether it might be possible to launch a more modest employment programme of the type that the alliance has suggested. There are no incompatibilities between our figures. The £6 billion programme suggested by the Liberal Party is, as my hon. Friend the Member for Gateshead, West said, expressed as a gross figure. The net figure for the same proposals for employment is £2 billion. If one adds to that the cost of the proposals for training and public works, the net total becomes £2·8 billion. That is the figure that I quoted at Crosby. My hon. Friend the Member for Gateshead, West pointed out that, in addition, the Social Democrats favour halving the national insurance surcharge, thereby adding a further £1 billion. We did not have in mind the ingenious trick perpetrated by the Government of withdrawing the benefit of this from the nationalised industries, so that they can no longer compete on equal terms. We quote consistent figures, and they are consistent with what we are saying to the House.

Mr. Jack Straw: Does the right hon. Lady realise that what she just said is at variance with what her hon. Friend the Member for Gateshead, West (Mr. Horam) said last Thursday? He said that there was a difference between the view of the Liberal Party and that of the Social Democrats with regard to general reflation. He went on to say:
We cannot now do much by means of general reflation".—
[Official Report,  11 March 1982; Vol. 19, c. 1015.]
The Liberals, on the other hand, are calling for general reflation. More specifically, the Liberals have called for the abolition of the national insurance surcharge at a cost of just under £3 billion. The Social Democrats are calling for a halving of the surcharge. There is, therefore, a yawning chasm between the Liberal and the Social Democrats.

Mrs. Williams: The hon. Member for Blackburn (Mr. Straw) may try to find a chasm, but he will not succeed. I read the speech of my hon. Friend the Member for Gateshead, West before today's debate as I imagined that the hon. Member for Blackburn would have a go and try to make the charge that he has just made. In the first part


of his speech, my hon. Friend the Member for Gateshead, West discussed the employment programme advanced by the alliance. I, too, was addressing my remarks to that. At the risk of boring the House, I should put the matter straight with the hon. Member for Blackburn. The costing of the programme was on net and gross figures, which my hon. Friend the Member for Gateshead, West gave. He went on to say, rightly, that halving the national insurance surcharge, as we suggest, would cost £1 billion a year. He then answered precisely the question that the hon. Member for Blackburn asked. He said that it was the Liberal Party's view that the whole of the surcharg could be removed in one year. There is no great difference of opinion, and we have never argued about that issue. Moreover, there is no difference in the calculations of the cost of the employment programme that we have advanced. Nor is there a difference between the schemes that we are suggesting to the House.
The most impressive speech today, and the one that will probably be remembered by our children and grandchildren, was that of the right hon. Member for Sidcup (Mr. Heath). The reason for that was straightforward. I am not trying to recruit the right hon. Gentleman—I would not succeed. The right hon. Member for Sidcup addressed himself to the international constraints in which we find ourselves. Essentially, the Budget will be less important than what happens to oil prices, grain prices and the United States interest rate. We are in many ways trapping ourselves into talking as if we have more control over our economic future than we really have.
I believe that the Government are praying for three things: first, that the price of grain will fall; secondly, that Congress will reject President Reagan's budget; thirdly, that oil prices will stabilise—all of which will give some encouragement to growth as next year comes. But the Budget is irrelevant to all that, as it flies in the opposite direction. If none of those outside forces comes to the rescue, Government policy will undoubtedly be more disinflationary next year than this year, and they will have to answer for it if we then find that the long-strained social fabric of the country begins to rip. There is a limit to how much patience people will have with a Government who seem to have no idea of what to do about long-term poverty and long-term unemployment.

Mr. Michael Martin: I shall not delay the House long. Just as I came to the Chamber, I received news of redundancies in the tobacco industry in my constituency. Imperial Tobacco is to cut 600 jobs in the Glasgow Alexandra Parade factory, and I understand that my hon. Friend the Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) has received word that 500 jobs at the Imperial Tobacco division in Stirling are also to go. I have also been informed by the Tobacco Workers' Union that about 2, 600 jobs are to be lost in the industry. I am therefore glad of the opportunity to raise this matter in the Budget debate.
Workers in the tobacco industry have never refused to allow new technology to come into the workplace. Two years ago, when I was first elected, I visited my local factory. There was a machine that produced about 2, 000 cigarettes a minute. A new machine producing about

6, 000 cigarettes per minute has now been introduced. Reduced consumption can mean only one thing—more redundancies.
There is a high proportion of female labour in the industry. Many women in the factories have unemployed husbands. Although the official figure for unemployment in my constituency is about 17 per cent., there are whole streets in my constituency in which none of the boys and girls has a job. In some of the deprived areas, such as the east and north ends of Glasgow, the unemployment rate is 20 per cent. to 25 per cent.
The tobacco industry provides a great deal of money and taxation for the Exchequer. It seems only right and fitting that the Government should consider the danger facing the industry now. In a city such as Glasgow, which has a traditional tie with the tobacco industry, it is only right and fitting that the Chancellor should bear in mind the social consequences of damage to the industry resulting from the measures that have been taken over the years.
I have absolutely no objection to banning the advertisement for cigarettes. I have no objection to banning smoking, provided that alternative employment is found for workers in the industry. When people argue that it is irresponsible to allow advertising and to encourage the industry, I reply that it is equally irresponsible not to be prepared to examine the consequences of unemployment in the industry.
Will the Government use their good offices to make representations to Imperial Tobacco to reconsider its decision to close its only two factories in Scotland?

Mr. Charles Morrison: I think that we would all have sympathy with an hon. Member from north of the border who is concerned about factory closures in his constituency. The hon. Member for Glasgow, Springburn (Mr. Martin), like many others, emphasised the worries about unemployment.
Most of us, most of the time, would like to find ourselves in agreement with our own Front Bench and able to congratulate its members on their policies and actions. For some time past, I have not felt able to do that with regard to the economy, which was at least a matter of regret to me. It is, therefore, all the more pleasant and a relief to be able now to make a few complimentary remarks.
I suspect that the most important aspect of the Budget may be that for many people it raised their hopes for the future by a little or even more. Within the not over-generous limit that my right hon. and learned Friend the Chancellor imposed upon himself, that is no mean achievement. He has created some breaks in the clouds of economic gloom and he is to be thanked for doing so.
That the wilder shores of monetarism seem to have receded beneath the horizon is also a matter for gratitude. However important control of the money supply may be as a means of controlling inflation, to my mind it is not the only objective of economic policy, and, if it is, it can lead to dire consequences.
An article appeared in The Times this morning entitled:
Should we learn to live with inflation?
The article, which is well worth reading, points out among other things that


There seems to be little evidence that knocking a few percentage points off inflation produces benefits that justify the immense costs of achieving it through restrictive financial policies.
It continues:
Inflation, unlike deflation, does not cripple the economy. While undesirable, it is tolerable (and, through indexation and so on, could be made more so). Mass unemployment is not.
There is a great deal of truth in that.
Nobody wants anything other than a falling rate of inflation, but if the achievement of that objective confounds the possibility of achieving the objective of maintaining a reasonable level of employment, some reassessment of priorities and of the rate of progress towards specific objectives must be made.
In that regard, it is most encouraging that this year the Chancellor has laid so much emphasis on industry and on jobs. In the past two and a half years, the private sector of industry has been purged quite enough. From now on, by one means or another, it must be given the chance to take advantage of its new fitness and competitiveness.
The increase in investment by nationalised industries to which my right hon. Friend the Secretary of State for Industry referred will undoubtedly help. The opportunity for British Telecom to raise market capital will also help. I hope that that will result in more orders for some of the new microchip-oriented factories in my constituency.
With some 400, 000 unemployed in the construction industry, assistance for that industry was a prime need. The 14 per cent. increase in public spending in this respect is most welcome. The further benefit that will accrue with the application of improvement grants will be an extra stimulus, but adequate publicity must be given to the availability of the improvement grants if they are to be taken up to the extent to which they should be.
The cut in national insurance surcharge is a bonus across the board. At a time when industry has been under great pressure, and has been castigated for inefficiency of one kind or another, one of the hardest burdens for it to bear has been the level of imposed overheads and costs. National insurance surcharge, interest rates and energy costs all come into that category, and it is to be hoped that all three are now on a downward trend.
I welcome, too, the Chancellor's proposal to assist at least some of the long-term unemployed through his community work programme. I was sorry to see in one newspaper today a report that some voluntary agencies are casting doubt on the possibility of organising adequate community work to cope with the 100, 000 people or of taking up the £150 million involved. I hope that in due course it will be possible to produce programmes that will make use of the Chancellor's offer.
Naturally, I was pleased at the Rooker-Wise adjustment plus 2 per cent., and I am glad that the Chancellor resisted calls for a cut in the standard rate of income tax. To my mind, it was far more important that he should use whatever resources he had more directly for industry and the relief of unemployment. Representing a constituency in which the largest single industry is still agriculture, I regret that there was no proposal in the Budget to treat income from farm tenancies as earned rather than unearned income. Such a proposal would encourage landowners to let land and might have brought a little much-needed new life into the landlord and tenant system.
Nevertheless, the Budget contains much that will help and please many people. Indeed, I cannot recall a Budget that contained more of the specific proposals for which I had hoped.
In the end, however, in common with my right hon. Friend the Member for Chesham and Amersham (Sir I. Gilmour), I have a feeling that the parts will prove better than the whole. Undoubtedly, the Budget is a step forward. If the rest of the world were enjoying good economic health, it might have proved to be just that touch on the accelerator that was necessary and prove to be all that was necessary, but as we know only too well, the rest of the world is not in good economic health. The United States seems to be digging itself deeper into recession. To put it at its mildest, there seems to be little evidence that the trend in American interest rates is on a continuing downward path. Of course, Congressional elections in the autumn are bound to cause a build-up of pressure on Mr. Volcker, but it is difficult to foresee what will result because, as my right hon. Friend the Member for Sidcup (Mr. Heath) said, he seems to be entirely his own man and there is little direct control over him. Thus, it seems essential that the Chancellor and his Community colleagues not only set out to influence their American counterparts but set about the construction of defences against the consequences of a deeper American recession.
As I have said, the Chancellor has created some breaks in the economic clouds and given us some glimpses of the sunshine behind. It would be a tragedy if the hopes that he has raised were once more to be dashed by economic storm and tempest. It is therefore all the more important that, through international initiative and further national stimulus as needs be, he should continue to do his best to maintain and improve the economic climate.

Mr. Joel Barnett: I found the Budget speech depressing and, in many ways, the speech made by the hon. Member for Devizes (Mr. Morrison) even more depressing. I am most disturbed to find that Conservative Members, who must know what underlies this Budget, have found things to welcome in it. The underlying result of it will mean that by April 1983—four years after the Government came into office—unemployment will be rising beyond 3·5 million. I thought that hon. Gentlemen knew what the Chancellor was about, but they have accepted it and are willing to welcome it. That is most depressing because, whatever the Chancellor may or may not have done—whether his actions are reflationary, deflationary or whatever—in the context of a £280 billion GDP, they have little or no significance, as the hon. Member for Devizes must know.
I find it particularly depressing that the Chancellor appears to have learnt nothing from his past errors or those of previous Governments, of which I was also a member. He has failed to learn lessons on almost every major area and I particularly refer to a diagnosis with which I agree. The Chancellor's Budget Statement said:
We had been paying ourselves too much and producing, and selling, too little. During the 1970s, money incomes had gone up 20 times as much as real output. That was a sure recipe for inflation, for lost markets, and for lost jobs.
Of course, he was right. However, real output has continued to fall since 1979. When my right hon. and hon. Friends on the Front Bench told the Chancellor and the Chief Secretary to the Treasury that in 1982–83 real living


standards for the majority of people would fall, instead of agreeing, they fell over themselves—indeed, the Chief Secretary did that almost literally—in disagreeing. Yet, judging from the diagnosis that he spelt out, one would have expected him to agree that he was seeking to cut real living standards in line with the cut in output that he presided over.
On his own diagnosis, his actions have led to
a sure recipe for inflation, for lost markets, and for lost jobs.
If he has done nothing to bring incomes in line with output, at least the Chancellor now tells us that he expects growth, in the next 12 months, to be at 1·5 per cent. and then perhaps at 2 per cent. He did not tell us how or where that was coming from. I hope that he is right, but it must surely be one of those mystery thrillers that he told us about at the beginning of his speech.
More important than whether there will be a 1·5 per cent. growth next year—a modest growth that will result in an increasing level of unemployment—is whether even that level can be sustained or, indeed, increased.
The right hon. Member for Sidcup (Mr. Heath) asked where that demand was to come from. The Chancellor constantly tells us, both in the House and outside, that there is no need to inject demand. He says that the problem is not demand. Of course, he is right about some industries—the car industry and others, where it is not increased demand that is needed but better production, quality and productivity to supply the goods that the markets want.
However, many industries need increased demand, as all hon. Members in their constituencies and elsewhere must have seen. There is a shortage of demand in many industries and companies. Such industry could have been helped by increased capital investment through the public sector, which helps private companies to get increased demand and output.
The Chancellor repeats that if he increases demand it will all go into imports and prices. It is true, to a considerable extent, that that is exactly what has happened in the past.. However, because of that, he seems to be implying that he will never increase demand. Indeed, if he accepts that simple line, he will never be able to increase demand. That is a policy of despair.
The right hon. Member for Down, South (Mr. Powell) said that the Chancellor cannot borrow any more money or could not borrow substantially more without there being inflation and high interest rates. There is no evidence of the truth of that statement. The Chancellor goes much further because, in his medium-term financial strategy, assuming that he still has one, he proposes on the public sector—

Mr. Cormack: It has gone.

Mr. Barnett: I am sure it is nice that Conservative wets can console themselves that the money supply has gone. I hope that they are right and that the medium-term financial strategy no longer exists.
However, the plain fact is that the Chancellor's Budget, at least so far as the public sector is concerned, has reduced demand by a declining proportion of the GDP taken by the public sector borrowing requirement. He has left the gap to be filled by that private sector in which he told us he did not want to increase demand, because it would add to prices and imports. That is a very strange argument. The

PSBR—those four damned letters I have referred to in the past—is perhaps the most depressing of all the Chancellor's policies. I have said something about it in the past and I say something about it in my book.

Mr. Douglas Hogg: Who is it published by?

Mr. Barnett: I leave that to the hon. Member for Grantham (Mr. Hogg). I shall concentrate on the PSBR because the Chancellor's policy in that respect is utterly wrong. It is wrong, as some of my right hon. and hon. Friends have said, because with so much spare capacity and against a background of more than three million unemployed the Chancellor has failed to learn any lessons of his own or past Government's failures.
The Chancellor still apparently believes that the PSBR is central to all his policies. Using a different form of words—he must keep changing them—he told us:
Recent experience throughout the world exposes the myth that big Budget deficits are good for growth and employment".
Anybody who starts quoting international comparisons in aid of any policy is on very dangerous ground. The Chancellor must know that he is on dangerous ground because international examples can be used on both sides of the argument. Many countries have high Government deficits but one can argue that that policy has been successful. However, the plain fact is that it varies from country, as do definitions and the economic and financial circumstances of those countries. Therefore, to make such comparisions is ridiculous. Nevertheless, the Chancellor still believes that the PSBR is essential to his policies. He further said that:
The acid test for the PSBR is the level of interest rates at which is can be financed.
Is it the "acid test"? The right hon. Member for Down, South again sought to defend the Chancellor-although he would not perhaps put it that way—on interest rates. Is it really argued that interest rates are the acid test of the borrowing requirement, whether it is 5·5 to 6 per cent. of GDP as in 1981–82, or 3·5 per cent., which the Chancellor wants it to be in 1982–83?
The plain fact is that the Chancellor must know that interest rates would be lower now, or very soon, if it were not for his exchange rate policy. It is not just because of the PSBR, although that is a factor. The level of United States interest rates, as many hon. Members and others have stated, is clearly just as important a factor, if not more so. The same applies to inflation, oil prices and the Chancellor's removal of exchange control, not to mention the balance of payments and many other policies which affect the level of interest rates. Indeed, the Chancellor's money supply policy—assuming he still has it—made it clear that the uses interest rates to manipulate his money supply policy. I suppose that Conservative wets must hope that the Chancellor no longer needs to do that because he does not have a money supply policy. But there are no simple lessons that tell us that a figure as uncertain as the PSBR can be, as the right hon. and learned Gentleman said, an acid test or, as he told us last year, critically important.
I had hoped that, if nothing else, I had shown the House of Commons and the present Treasury Bench that it is possible to put in, take out, massage, fiddle or fudge the PSBR total almost at will to arrive at the figure of which the Chancellor of the Exchequer first thought. The Chief Secretary has done that again. The trouble is that the


Chancellor of the Exchequer believes him. He seems to have implicit faith in figures that the Chief Secretary presents to him. It was different in my day. The Chancellor of the Exchequer had very good reason to have faith in the figures that I presented to him because I told him what I had done with them.
Despite all those limitations of the figures, the Chancellor of the Exchequer told us that he would provide for a public sector borrowing requirement of around £9½ billion".
Certainly it is around £9½ billion. According to the Financial Statement and Budget Report, it is between £5½ billion and £13½ billion. The right hon. and learned Gentleman's average margin of error, which is down a little this year, is only £4 billion. For that figure, the right hon. and learned Gentleman is sacrificing the British economy. For that central figure of the PSBR of around £9½ billion, he is forcing us to make all the sacrifices about which we have heard.
On top of all the other lessons that we hoped that he had learn by now, the right hon. and learned Gentleman fails to distinguish between a PSBR increase by capital expenditure and one by current expenditure, despite the obvious difference in the use of resources. Whatever the money is borrowed for—whether it be capital or current expenditure—I appreciate that it still has to be borrowed. But why is it removed from the acid test of the Chancellor of the Exchequer if the borrowing is classified to be outside the PSBR either by privatisation in whole or in part or by juggling with the method of financing?
At the start of today's debate, the Secretary of State for Industry boasted about the way the Government had managed to increase capital investment. Yet apparently it is bad if they increase the PSBR.

Mr. J. Enoch Powell: Surely the right hon. Gentleman knows the answer to the question the he has just asked. The difference is that the instruments of private borrowing are not convertible into money in the way that the instruments of public borrowing are.

Mr. Jay: They are.

Mr. Barnett: The logic of the right hon. Member for Down, South often escapes me. He goes a bit too far with his own logic. In economic resource terms, it makes no difference, as he must know. Equally, the right hon. Gentleman has failed to say, if the PSBR is increased by, say, 2 per cent. of GDP, what difference that will make to the serious problems that the country faces and why it will be disasterous in increasing interest rates. That has never been shown to be so, and neither the right hon. Gentleman who makes the case better than the Chancellor of the Exchequer, nor the right hon. and learned Gentleman has been able to argue that case.
If by juggling with the definitions of what goes and what does not go into the PSBR the Chancellor of the Exchequer is able to increase the amount of resources that the Secretary of State for Industry wants to see going into capital investment, I go along with him. But it is not only the PSBR that the Chancellor of the Exchequer juggles. It was remarkable to hear him give some complex reasons why the sterling M3 figures did not mean what they said. He said:
The evidence as a whole does not suggest lax monetary conditions."—[Official Report,  9 March 1982; Vol. 19, c.727–736.]

I suppose that is what the right hon. Member for Sidcup described as "pragmatic". The Chancellor of the Exchequer is right to disbelieve his own figures in this respect—or perhaps not to understand them. The trouble is that he still believes too many of his own figures. Where he is clearly wrong is in assuming that sterling M3 has anything to do with the damage that he has done to the economy in the last three years. That is entirely due to the massive old-fashioned deflation that he has imposed on our economy.
I hope it is clear that I believe the Chancellor of the Exchequer to be wrong to place such reliance both on sterling M3 and on the PSBR, although at least the right hon. Member for Sidcup may be right when he says that we are now seeing a more pragmatic approach to sterling M3. I hope for the reasons that have been given that there will be similar scepticism on the part of the Chancellor of the Exchequer about the PSBR as a means of controlling the economy, especially with unemployment running at more than 3 million and certain to rise well above that over the coming year. However, at the moment, judging from the Budget Statement, it is still the case that the PSBR is a totem pole which continues to dominate the right hon. and learned Gentleman's policies.
My right hon. Friend the Member for Stepney and Poplar (Mr. Shore) was right to argue for much more if we are to make any serious impact on the appalling level of unemployment and the social, economic and industrial consequences of what is happening. They are far too serious for any tinkering at the margin. But for all the limitations of the PSBR, it is just as wrong to ignore it totally as it is to treat it, as the Chancellor of the Exchequer does, as an acid test.
My right hon. Friend must have expected some fun to be poked at the huge gap in his proposals that has been filled by what he described as an economic assessment. I hope that he will not worry when the attacks come from the Chancellor of the Exchequer, whose only method of filling the gap is with more than 3 million unemployed. I hope that he will not worry when they come from the SDP which, the right hon. Member for Crosby (Mrs. Williams) told us, would fill it with a statutory incomes policy described as "fiscal policies". Neither of those solutions is acceptable—and certainly not the Government's solution of 3 million and more unemployed. But if my right hon. Friend's proposals are to be credible, he must spell out what he means in terms of income, and he knows that those terms cannot be fudged.
Until that central part of my right hon. Friend's alternative is worked out and agreed—I am well aware of the difficulties of getting agreement—my own pessimism about the economic and social prospects remains. My right hon. Friend at least offers hope. That is more than can be said for this depressing Budget.

Rev. Ian Paisley: Earlier today we heard a contribution from the right hon. Member for Down, South (Mr. Powell). I would have expected the representative of a constituency in Northern Ireland, a place which is blighted with unemployment, and a constituency which has some of the worst plague spots of unemployment, instead of regaling the House with an interesting and humorous speech in which he sought to clobber with a crowbar the right hon. Member for Stepney and Poplar (Mr. Shore), to refer to the terrible state of


affairs that we have in the Province. The right hon. Gentlman's speech will have brought no hope to the unemployed in Newry, to the old-age pensioners in Kilkeel, or the school leavers in Banbridge. I am sorry that the right hon. Gentleman left the Chamber before I had an opportunity to make that comment.
I seek to put two matters to the House. The first relates to the dreadful unemployment level in Northern Ireland. Everyone in the House knows how deep are the political divisions between those who take the Unionist philosphy and those who take the Republican philosophy, but it may interest the House to know that Unionists and Republicans are coming together on this great issue of unemployment in Northern Ireland.
Last Saturday, when Courtaulds announced that it intended to transfer its viable moygashel operation—which has been in Ulster for two centuries—to this side of the water, it was interesting to note that the official Unionist chairman of the council, the leader of the SDLP and myself as leader of the Democratic Unionists were on the same platform resisting what we felt to be an increasing calamity in Northern Ireland.
I have been asked by many hon. Members on both sides of the House why we do not unite. That is happening over the problem of unemployment. As that develops, I trust that the House will listen with sympathy and that the Government will give practical help.
It is not enough for the Government to say that investment is needed in Northern Ireland if they are not prepared to invest there. If the Government have no confidence in our economy, how can we expect others to invest in Northern Ireland?
Having underlined the calamity of unemployment, I raise my voice on behalf of the old-age pensioners in Northern Ireland. My remarks could apply to all retired people in the United Kingdom, but in Northern Ireland there will shortly be a 22 per cent. increase in rents. The price of electricity and gas—indeed all fuel—is higher in Northern Ireland than anywhere else in the United Kingdom. Retirement pensioners are feeling the darkness, the depression and the hopelessness of the situation. They ask me, 'and other public representatives, why they must wait until next November before getting any help. They face a higher cost of living in Northern Ireland than obtains in the rest of the United Kingdom. With the present depression, those who could help them are out of work themselves, with no possibility of getting jobs. The pensioners are facing extreme pressure.
I make a special plea today by repeating the cries of the pensioners to the Government Front Bench. I hope that the Government will consider this matter with great care and pay some attention to those who are stretching out then-hands for help.

Mr. Ray Powell: I have listened to the debates since last Tuesday and to the intricate arguments on the Budget made by the financial geniuses on both sides of the House, but it is difficult to explain the problems of Government and the financial ramifications of administration to 3 million or 4 million people who are unemployed.
I have great difficulty explaining to the 7, 000 in my constituency of Ogmore who have lost their jobs in the past

two and a half years why the Government's fiscal and monetary policies have not only made them jobless, but their sons and daughters as well.
All the experts have readily agreed that the Budget has made the possibility of obtaining jobs less likely, and the forecast is that another 300, 000 will join the dole queues within a short time. We are told that these measures will cure inflation. The Government have argued that since 1979. They do not care about the escalation of unemployment, its cost to the individual, the humiliation, degradation, defeat that it imposes, or the despair that it inflicts. No, everyone must suffer to bring inflation down. However, after all this suffering, inflation is higher now than when the Government took office.
Who have benefited from the Government's fiscal measures? Let us look at the way in which the nation's wealth has been distributed, which brings me to the morality underlining this Budget and the Budgets of 1979, 1980 and 1981. We have already established the fact that a massive total of 4 million have been discarded on to the scrap heap. With barely enough on which to survive and no hope for the future they are unwanted members of society.
Let us examine where the wealth has gone in the last two and a half years. Have the rich got richer and the super-rich enjoyed even more riches? The plain, undisputable truth is that the way in which the nation's wealth is distributed is grossly unfair. Budget after Budget increases the already great disparities between the rich and the poor. The only people paying less tax now than in May 1979 are those with incomes of £25, 000 a year or more. For example, the tax on an income of £27, 750 a year has gone down from 83 per cent. to 60 per cent.
Let us examine the benefits that some top salaried people now enjoy. Sir Leslie Smith of the British Oxygen Company received £18, 352 a year in May 1979. in 1980–81, he received a salary of £54, 812, an increase of 199 per cent. Gerald Ronson received a salary of £21, 114 in 1979. He now receives a salary of £86, 412, an increase of 309 per cent. I could give numerous other examples, but in order to save time I shall refer only to Patrick Sergeant, the city editor of the Daily Mail. In 1979, he received a salary of £16, 310, but in 1980–81 it went up to 108, 670, an increase of 566 per cent. in two and a half years.
Between May 1979 and November 1981, the retail price index rose by 42 per cent. I wonder how many workers got increases of 42 per cent. I shall relate an incident that occurred in my constituency a fortnight ago. A company called Christie Tyler held a meeting with 1, 000 of its workers in a cinema in Bridgend and persuaded them to accept a 10 per cent. reduction in salary to keep their jobs. That is happening with other companies in other areas. Indeed, because unemployment in parts of my constituency is now running at 25 per cent. and more, those workers accepted that 10 per cent. reduction to safeguard their jobs.
Is it true that the rich are getting richer? Asprey, the exclusive Bond Street jewellers, claims that the last two years have been the best it has ever had and that it has plenty of continuous support. Sothebys claims that the top end of the market is absolutely, incredibly buoyant. Harrods claims that furs are selling well, but boasts that it caters only for the top end of the market. For eating out, dinner for two at London's Le Gavroche will cost £80, if one goes easy on the wine list. With the benefit of up to £40·25 a week, I am sure that the unemployed will go


along to Le Gavroche for a meal at £80 a couple. What they will live on for the next fortnight is another matter. I have yet to meet a miner who has gone to Asprey to buy his wife some jewellery or to Sotheby's to purchase a £39, 000 water colour, or to Harrods for a fur. Therefore, the workers have not benefited to that degree.
I should like to draw the House's attention to a number of those who have benefited. Let us examine the £2 billion giveaway by the Government over the past two and a half years.
First, the Tories cut the investment income surcharge. The cost to the nation was £232 million. They then decided to introduce concessions on capital gains tax, which cost the nation £85 million. They then decided to introduce concessions on capital transfer tax on gifts and estates, and gave away £125 million. They cut the capital transfer tax rate. The cost to the taxpayer is anybody's guess. If £2 million was given away under the last Labour Government, it would have cost £1, 246, 500 in tax. Under the present Government, only £798, 250 would be paid—a saving of nearly £500, 000.
Who made money out of privatisation—that typical Tory rip-off? The sale of BP shares cost £6·5 million. The sales of British Aerospace shares and Cable and Wireless shares cost £5·5 million and £6 million respectively. The bankers for all three sales of Government stock for privatisation were Morgan Grenfell, Kleinwort Benson and J. Henry Schroeder Wagg. The brokers were Cazenove, Hoare, Govett and Rowe and Pitman.
Even more important, how was it possible for the merchant bank of N. M. Rothschild to be paid about £500, 000 for preparing the sale of the British National Oil Corporation's oil and gas assets when legislation has not yet gone through the House to allow the sale to take place? Perhaps the Secretary of State for Energy would like to explain that on the Floor of the House.
There must be some happy families about—there is no doubt that there are some. I shall examine the dividends payable to three members of the board of Sainsbury's, the supermarket chain. In 1978, Sir John Sainsbury received £520, 022. In 1981 he picked up £1, 240, 184. In 1978, Mr. Tim Sainsbury, his brother—a Member of the House—received £482, 813, but in 1981 he picked up £1, 151, 446. In 1978, his cousin, Mr. David Sainsbury, received £1, 475, 803, but in 1981, under this caring, sharing Government, he picked up £3, 519, 595. The dividends for the Sainsbury family totalled £2, 478, 638 in 1978 and £5, 911, 525 in 1981—an increase of 138 per cent.
I could go on to the Forte family and expose to the House and the nation the exploitation of the poor for the rich. Let me just mention the fact that the dividends of Barclays bank were £29·7 million in 1978 and £62·4 million in 1981.

Mr. Dykes: Will the hon. Gentleman give way?

Mr. Powell: No. I have a long way to go and a short time in which to get there. The hon. Gentleman will have his chance later.
The dividends paid by Barclays bank increased by 110 per cent. between 1978 and 1981. Lloyd's bank's dividends were £16·9 million in 1978 and £38 million in 1981—an increase of 125 per cent. The National Westminster bank's dividends were £26 million in 1978 and £51 million in 1981—a 97 per cent. increase The banks have picked up an average increase of 108 per cent.
The Budget is nothing short of a travesty of justice for the unemployed, the sick and the elderly and those lucky enough to have a job. It underlines the Government's determination to continue with the policies that have caused the crisis and their further determination to inflict even more permanent harm on top of the industrial disaster that they have already created.
The Budget displays utter contempt for those who are out of work and is designed to put another 300, 000 on the dole. We can expect the unemployment figure to be nearing 4 million by the end of 1982.
The biggest deceit is in that the Government will be taking more, not less, out of our pay packets in tax and national insurance. Workers will be worse off, not better off, but that was not highlighted by the financial wizard from Port Talbot.
What will the Budget mean for the unemployed? A single person will get a £2·50 a week increase, from £22·50 to £25. A married person will receive an extra £4·05, taking his benefit to the staggering figure of £40 45. How can a family manage on that? How can the Chancellor understand the financial problems of the unemployed when his salary is almost £600 a week?
I advise the Chancellor to go back to his home town of Port Talbot, talk to those kicked out of a job in the steel works and ask them what it is like for a married couple to live on £40·45 a week, with two mouths to feed, two people to cloth and mortgage or rent, rates and lighting and heating costs to pay. A night out is a luxury for the unemployed.

Mr. Douglas Hogg: So it is for the unpaired Member.

Mr. Powell: It is all right for the hon. Member for Grantham (Mr. Hogg) to laugh. He is not interested; he was brought up with a silver spoon in his mouth. It is a pity that he does not try to manage on £40·45 I expect that he spends that much in a week in the Tea Room.

Mr. Hogg: Do not get excited.

Mr. Powell: I get excited because I represent people who are out of work.
What are the Government's proposals to alleviate the problems of the unemployed? There is to be a community work scheme costing £150 million for 100, 000 places. This half-baked scheme for the jobless is little short of a scandal. We on the Opposition Benches demand a proper solution to the plight of the unemployed. They should have properly paid and permanent jobs—not something that at best can only be described as an attempt to keep (hem amused and to remove them from under their wives' feet. There has been no attempt by the Government to tackle the problem in a realistic and positive way. There has been no attempt to end the misery for four million people. There are only plans to mollycoddle the mealy mouthed monetarists and to muffle the wets.
The Budget underlines the complete bankruptcy of the Government's policies and the failure of the capitalist system to solve that most pressing problem of the poor. The Budget has disappointed the pensioners, dismayed the mothers, who receive a measly 60p increase in child benefits in November, and disillusioned the disabled. For those in work, with petrol, beer, whisky and spirits, cigarettes and cigars, road tax, sherry and wine, and cider and perry all up in price, the question arises what will be


the effect on the retail price index. The Government have created more divisions, more discord and more disharmony than any Government in living memory.
I conclude therefore with a plea to the Government. I have pleaded previously for compassion but I realise that this is not possible. For the four million jobless, for the millions of poor, for the sick, the elderly and the disabled and for those in the poverty trap, I ask that this mad bunch of monetarists should shed no more crocodile tears, show no more pretence of caring and display no more blatant hypocrisy. They should simply show our people a little mercy and resign.

Mr. James Hill: The House has had a rich feast of statistics. I am sure therefore that hon. Members will be pleased to know that I shall not burden them with still more statistics. A former Prime Minister, Mr. Harold Macmillan, once observed that in politics things are never quite as good or quite as bad as they appear at the time. The speeches in this debate have ranged between extremes of view that the Budget is utterly useless and that it is extremely good. I shall describe it as a medium and, indeed, helpful Budget. The collective opinion of the media and the commentators gives the Budget credit as a professional production achieved through consultation not only with Conservative Back Benchers but also with the CBI, chambers of commerce and all who have to implement its proposals at the end of the day. It is a Budget that will assist small businesses.
On hearing the views of academic economists—we have heard five different versions from the SDP alliance alone—small business men must throw up their hands in horror. If there is a collective voice among small businesses, it has been saying for years that the Government should get off their backs. For the first time, the Budget is a genuine attempt to remove small businesses from Government control and to free them from unnecessary paper work and impositions such as the national insurance surcharge. Small businesses are pleading for the raising from their shoulders of increased rate burdens and water charges—all the things that delay their taking on additional staff.
It is the policies of Opposition Members who now expound theories that have been tried in the past and have utterly failed that have brought us to the state where in the middle of a recession it becomes increasingly difficult to find the true answer. My right hon. and learned Friend the Chancellor has, however, made a genuine attempt to find those answers. Much though small businesses are sometimes decried, those businesses, by taking on one or two staff each, would deal with the unemployment problem. It is time to recognise that any assistance given to small businesses will lead to the betterment of the unemployment figures.

Mr. Straw: Does not the hon. Gentleman recognise the fantasy land in which he lives if he believes that all the single-handed hairdressers and window cleaners could take on another hairdresser or window cleaner when their business is already flat? Is the hon. Gentleman really saying that the economy is so buoyant that every window cleaner, hairdresser and self-employed plumber has so much work that he can double the number of people he employs?

Mr. Hill: I am not saying that. I am saying that small businesses will expand with the economy. The window cleaner or the small hairdressing salon that the hon. Gentleman mentioned will be able to take on additional staff. We must not look always to the multinationals to increase their labour force. The small businesses will take on individual staff.
It is sometimes claimed that the House of Commons represents all sections of society. There is, however, an occasional imbalance. Too few hon. Members, I believe, have read the book on how to run a small business or have had experience of doing so. Those who come to the House from university or working for a charity or the trade union movement are sometimes not aware of the real problems involved in running a small grocery or high street shop. Those with such experience are under-represented in the House.
Good management, as well as good labour relations, is essential. The Japanese have shown that good management is perhaps the best means of gaining the co-operation of the work force. We can never compete with the Japanese. They have an internal discipline in their society that we have lost. We are perhaps too individualistic in our outlook. The British working man now is an individual and will remain so. He does not want to be part of a family for 24 hours a day in his mode of employment.

Mr. Dykes: Will my hon. Friend nevertheless agree that the principal and abiding characteristics of Japanese economic success are elements such as total co-operation involving State, banks and companies, low interest rates, export subsidies, guarantees and other kinds of subsidies, total job security, in the main, and the realisation that, although profit is important, it is none the less the residue when all the operations have been dealt with? Why are those characteristics not emphasised to a greater extent here?

Mr. Hill: That is precisely what is being emphasised. There will be more benefits for small businesses. The items mentioned by my hon. Friend that are part of the success story of Japan already exist here. We have a different system by which banks support business. There are the business loan scheme, the small businesses' loan scheme and the agricultural fund.
Small acorns grow into great oaks. We cannot expect to catch up with Japan overnight. There are no advantages to be gained in Britain by pretending that the rewards will come by remaining idle and discontented. We must encourage businesses to take away the hump or crest of unemployment. We must work together to ensure that unemployment does not reach 3·5 million. The area that I represent does not suffer quite as much as others, but it has problems. Some are self-inflicted, such as the dispute at the port of Southampton.
I have a special criticism of the Chancellor. I declare an interest as president of Motor Schools Association and as a council member of the Institute of Advanced Motorists. I am fed up with the motorist being clobbered. He has been a victim since road tax was introduced. There was an unnecessary penal increase on derv in particular, and on petrol. The increase in the road fund licence fee to £80 was also penal. Not only will motoring and haulage businesses suffer, but costs to the farming industry will rise. Perhaps there could be an understanding that next


year's Budget will avoid any increase that affects the motorist. Most of us are motorists and we have been clobbered far too much.
One of the pleasant aspects of the Budget is the £1, 000 million which is now available to local authorities as a result of the right-to-buy legislation. That is the final answer to all the criticism since the scheme began that it would not work, that no money would be available for new building and that no council houses would be left. Today £1, 000 million is being pushed into local authority coffers for the public tenant.
Both major political parties have pushed for grants for major repairs in hand. I am pleased that my Government are making a further large effort in that direction. I hope that in a future Budget VAT on repairs will be done away with.
It is not realistic to say that houses are being sold for £25, 000. The stamp duty threshold should have gone to at least £30, 000. I am sure that my right hon. and learned Friend the Chancellor has not bought a small house in a city for a long time, but the stamp duty proposal is a little mean. The minimum price for a normal three-bedroomed house is a little more than £25, 000.
The business start-up schemes are good. The extension of the allocation of shares to employees is also good. We want more of that. The increase in the limits on corporation tax for small companies is another good move, but the VAT registration threshold for small businesses is a little mean. It is up to £17, 000. The Chancellor could have been more generous and put it up to £20, 000. However, I welcome the increase.
When the Chancellor made his statement about the qualification for the 714 certificates laughter from the Opposition Benches displayed once again a lack of knowledge of the building industry. The move is excellent. Before, it was a question of a dog chasing its own tail because nobody could get a 714 certificate until he had been in business for three years. A technical college can turn out a plumber who might want to set up in business immediately but he had to wait three years. That is a long time for somebody who has just left technical college or university.
There was a good statement on the further push towards privatisation. I urge the Treasury Bench—on which Ministers are changing places as rapidly as ping-pong balls—not to put off floating the shares of Associated British Ports, or the British Transport Docks Board as it is known, and British Airways. Some of the disputes can have an effect on the value of potential shares. A 10-month strike—or dispute, as the trade unions call it—just before the flotation of shares in Associated British Ports would delay the Government's thinking. It would also bear on the information that the merchant banks would give. The Government must go ahead because disputes will occur at any stage. A dispute could take place deliberately two weeks before the flotation date. The sooner the Government grasp the nettle in relation to BNOC, Associated British Ports, British Airways and Sealink the sooner there will be harmony in those industries.
I emphasise that small businesses do not want Government help. They want the Government to get off their backs. When a person knocks on the door of a small business and says, "I am from the Ministry. I am here to help, " he is not believed. Particularly before 1979 small businesses experienced the maximum interference involving costly form-filling and legislation, such as the

Health and Safety at Work etc. Act. One hundred and one things were loaded on to small businesses and they want no more of it.
Will the Chancellor examine possible ways of helping with student grants? It is not a popular request but some students at Southampton university find it difficult to live on the grant. We have been a little mealy-mouthed over the 4 per cent. The grant should certainly go up another 2 per cent. in the not too distant future.

Mr. Cormack: And clobber the parent.

Mr. Hill: I do not know about that. Sometimes parental responsibility does not extend to the will to pay their part of the grant. That is something between student and parent. The Government can help by looking at that matter.
I had a letter from the Under-Secretary and I am sending it on to a student who has wriiten to me. It states:
If the assessed parental contribution scale had been in line with assumptions on movements in the earnings index, public expenditure on student awards at the level set for 1982–83 would have been about £10 million higher.
We are talking about a lot of money.
There is a great deal of good will in the universities for the Government at the moment. [Interruption.] Hon. Gentlemen may laugh but Southampton university's student union has elected a Conservative treasurer for the first time, and the Conservative group at the university is bigger than any other group, including the new baby, the alliance.

Mr. Robin Maxwell-Hyslop: In view of the important points that my hon. Friend has made about small businesses and so on, is he not disappointed that not one member of the Liberal Party or the SDP is present to hear the points that he has been making in this important debate?

Mr. Hill: We take that for granted. They have many speaking engagements at this time in trying to work up enthusiasm for the alliance.
I am chairman of the House of Commons flying club. We do not do much flying these days, but I am very pleased that the Chancellor has been so generous. The recipients do not think that he has been as generous as he could have been, but he has reduced avgas by 32p per gallon. It will help private flying—a sport that should be continued. I thank the Chancellor on behalf of the general aviation fuel committee and the House of Commons flying club.

Mr. Ted Fletcher: I hope that the hon. Member for Southampton, Test (Mr. Hill) will forgive me if I do not follow his meanderings through the Budget. He seemed to be advocating the case for small businesses, but ignored the fact that tens of thousands of them have been going into bankruptcy over the past two years. If they cannot find a better advocate, the best thing they can do is to vote for a Labour Government who will look after their interests.
The Chancellor said that the Budget was designed to help industry, jobs and people. It has done none of those things. It certainly has not helped jobs; nor has it helped people. The debate has concentrated on unemployment, and I want to speak about unemployment and the relevance of the Budget to that most obscene social evil of our age.
We all remember the election campaign and the posters by Saatchi and Saatchi showing unemployed actors in a long dole queue with the slogan "Labour does not work." The clear indication was that if the Tories got back into power something would be done to reduce the unemployment queue. However, the Budget debate has made clear that unemployment, on the Government's own admission, will increase beyond 3 million by a further 300, 000. According to most economists, by the end of the year the figure may be 4 million.
The reality is that unemployment has increased by 132 per cent. since the Government came into power. As day follows day, we read in the press and see on television that thousands of firms are closing down. In Darlington, a few days ago the firm of Crysler-Cummings Ltd. declared 540 redundancies. That is in a town where unemployment already stands at 15 per cent. Those people will only add to the long queue of unemployed who are seeking jobs. In this situation we must ask what effort the Government are making to stimulate industry.
The Chancellor of the Exchequer said that he wanted to help industry. He hoped that reducing the national insurance surcharge by £620 million would give some encouragement to renewed investment in industry. We all remember that in his first Budget he brought forward tax proposals which gave the rich over £2, 000 million. At that time he said that the money would be invested in British industry and would stimulate our economy. Unemployment continued to grow because very little of that money found its way to industry.
As the right hon. Member for Sidcup (Mr. Heath) said, the holders of capital are more concerned with interest than with investing in British industry. The £2, 000 million disbursed by the Chancellor in his first Budget was invested across the Atlantic, across the Channel, in South Africa, or anywhere where interest rates or profits were high rather than in British industry.
The Chancellor may claim that he is helping industry in his Budget, but we know that he is helping the industrialists, because the £620 million that will go into their pockets as a result of the decrease in NIS will not go into British industry. If it is left in the bank, it will earn a higher rate of interest than if it is invested in British industry. That is the ridiculous situation into which we have got ourselves. It is more profitable for people to deal in money than in goods. That is what is happening in our capitalist system of society.
The Labour Party has suggested that the economy should be expanded, as my right hon. Friend the Member for Stepney and Poplar (Mr. Shore) said, by £9, 000 million. The Liberals have suggested an expansion of the economy, but one has to toss up a coin to know the amount. It might be £3, 000 million or £4, 000 million. Some of the Conservative wets have also suggested that there should be an expansion in our economy. When we make a plea for expansion, we are asked "Where is the money to come from?" We should ask ourselves "Where is the money going to?" As my hon. Friend the Member for Ogmore (Mr. Powell) has shown, the differentials between the very rich and the very poor have increased tremendously over the last two years.
If we want to know where the money is going, we have only to look at the banks. Last year the Chancellor was so outraged that he imposed a once-and-for-all levy of £400

million on the banks, but money contiues to come out of their ears. They are making fabulous profits. The Chancellor has ignored the opportunity to get money from the banks to reduce his borrowing requirements.
We all know that many vast fortunes have been made since the Government took office in 1979. The Government should consider—I know that they never will—the imposition of a wealth tax, so that we can help to decrease the differentials between the very rich and the people who are becoming poorer hour by hour while the Government remain in office.
The biggest expenditure that we face is on our military budget. There was mention of the progress that Japan is making in capturing markets which have been traditionally British, overlooking the fact that the Japanese have spent practically nothing—less than 1 per cent.—on their military budget. All their brains—their research and development staff—are geared to industry, with the consequence that, with automation and modern methods of production, they are capturing the international markets. In Britain, 50 per cent. of our industrial personnel are engaged in research in the arms industry. They are employed by the Government on inventing bigger and better bombs. The Government are planning to spend almost £15, 000 million on the arms budget, which goes up relentlessly year after year; yet they claim that they do not have the money to expand our economy.
We have to consider carefully whether money is available if the Government wish to get their hands on it. The almost obscene picture presented by the sale of Amersham International, where overnight speculators made £25 million profit by buying shares and flogging them the next day, shows that the money is there. A total of £1, 750 million was over-subscribed for the £71 million assets of Amersham International in the hope of getting an allocation of those profitable shares. The money is available if the Government have the will to tackle the problem and see that the money is diverted into British industry.
By and large, the Government have ignored the necessity of raising the capital, and raising their borrowing requirements by taxing the people who have the money for Government investment. All that the unemployed can look forward to is continuous unemployment. One can understand the problems of inner cities where only 50 per cent. of school leavers can obtain jobs.
In my youth I lived through the 1930s, but in the working class we never had any great expectations. We were perhaps a little complacent during the slump. That will not happen this time because, after the 1960s and up to the middle of the 1970s, young people have become used to affluence. They have become used to being able to buy hi-fi sets and motor cycles, and many of them have been able to go to universities. They will not tolerate a society where the bleak prospect is that they will not be employed in the foreseeable future.
There will be violence in inner cities. Despair will give place to social unrest and these social consequences will be a direct result of the Government's inability to tackle unemployment. We are dealing not merely with a hopeless future for millions, but with the social fabric of the society in which we live.
I do not even give two cheers for the Budget, as the CBI did. The Government are taking a retrograde step. They are endeavouring to create the impression that the Budget is popular, but it is popular only with the City of London.


It is not popular among working people, with whom I mix every day, because the few concessions that have been given as tax reliefs will be more than offset by the increases in petrol, tobacco and beer. In addition, in April there will be the tremendous increase in the cost of the national insurance stamp.
No one gains, among the millions of workers and unemployed, from the Budget. Its concessions show that it is, as is usual with a Tory Budget, a rich man's Budget.
Labour Members have made it plain during this debate that the Government have no hope of curing the greatest social evil of our time—unemployment. We have suggested, in the alternative proposals that we put before the House, the possibility of at least bringing unemployment down to manageable proportions if a Labour Government were returned today.
The trouble is that the Tories never learn from history. The great slump in the 1930s in the United States was cured by Roosevelt with a tremendous injection of public funds—the Tennessee Valley authority, and so on. That stimulated industry, and unemployment began to decrease. The slump in this country was ended by the rise of Fascism in Germany. We needed an armaments programme. We had no difficulty whatever in raising public money to stimulate industry to produce the armaments that we needed. In emergencies, the money is available. The Government have not the remotest idea how to tackle the burning question of unemployment.
We want a Government who are prepared to recognise that our people are entitled, as of right, to expect full employment. We paraded in the 1930s for full employment and, since the Beveridge proposals, it has been on the banner of every Government, both Tory and Labour. All Governments believe fervently in full employment. Unless the Government are prepared to do something about it, the quicker they pack their bags and go and let a Labour Government tackle the problem, the better.

Mrs. Renée Short: On a point of order, Mr. Deputy Speaker. Some of us have been in the Chamber since 3 pm this afternoon waiting to be called to speak. Other hon. Members have just dropped in, made their speeches, and gone. It appears that the same people are left until the end in many debates. Can we be given an undertaking that there will be a postponement of the wind-up speeches to give some of us a chance to speak?

Mr. Deputy Speaker (Mr. Bryant Godman Irvine): That is not a point of order for the Chair.

Mr. Albert McQuarrie: I would say to the hon. Member for Wolverhampton, North-East (Mrs. Short) that I have been here since 2.30 pm. I came here for prayers, and I stayed in the hope that I would catch your eye, Mr. Deputy Speaker. I am delighted that I have succeeded in doing so. So not every hon. Member has come into the Chamber and immediately departed. However, the hon. Lady is quite right. It is a disgrace that hon. Members should come here, make their speeches, and then immediately depart, before even listening to what the following Member has to say about their speech.
On the last day of debate on the Budget Resolutions and the economic situation, so much has been said on every

subject that little is left to highlight before we enter the Lobbies this evening. However, there are a number of matters in my right hon. and learned Friend's speech last Tuesday which should be put on record, as it has been said many times in the media that the Budget was sufficient to draw together the wets and the dries to such an extent that there was no likelihood of a revolt on any aspect of the Budget.
It is true that my right hon. and learned Friend took a step in the right direction in presenting his Budget. I particularly welcome the increase in the mobility allowance, which will be of considerable advantage to some 40, 000 of the 210, 000 persons who are at present in receipt of the mobility allowance and who have a job. This will result in a benefit to them of about £5 a week, which is most acceptable, as the increase will not be subject to income tax.
I also congratulate my right hon. and learned Friend on his proposals for the reduction in the employers' national insurance surcharge, the increase in child benefits, and the increase in the old-age pensions, although, like the hon. Member for Antrim, North (Rev. Ian Paisley), I should have liked the increase to be immediate, or at least backdated to 9 March, instead of making pensioners wait until November.
The increase in unemployment benefit, coupled with the increases announced by my right hon. Friend the Secretary of State for Social Services, show that the Government have taken account of the less fortunate in this period of deep recession. I accept that in the short term these benefits will not reduce unemployment to any great extent, but the Government must continue to tackle it with the greatest possible urgency.
An important factor in that direction is the community work scheme, which is to be introduced to help the long-term unemployed. Tragically, many of the long-term unemployed are over 50 and, as many hon. Members have pointed out, in present circumstances they have little opportunity of finding employment, although many of them are highly skilled.
However, the community work scheme is only a temporary expedient and the Government must waste no time in finding a solution to the problem of the long-term unemployed, with special emphasis on those aged over 50. I hope that that point will not be lost on my right hon. Friends the Secretaries of State for Industry and for Scotland when they consider the final decision on the development and assisted area status of regions, particularly those such as Grampian—which includes Banff and Buchan and Gordon district councils—where, despite the jobs created by the oil and gas industries, unemployment is now escalating each month at an alarming rate. That is dreadful in a constituency that has helped to create benefits in Britain's oil and gas industries.
I shall not detain the House with more plaudits to my right hon. and learned Friend the Chancellor of the Exchequer on the other welcome points in his Budget, because I wish to develop those points that were less welcome and that will affect rural areas such as my constituency of East Aberdeenshire. The increase in duty on spirits put another 30p on a bottle of whisky. It may mean nothing to my right hon. and learned Friend that the very existence of many rural communities depends on the demand for whisky. The increases that he has imposed in this and past Budgets are forcing those communities out of existence.
In my constituency, lack of demand has meant the closure of a whisky distillery that has been in existence for many years. I must warn my right hon. and learned Friend that that is but one example of what will happen all over north-east Scotland within the next year or so, where sales of whisky have fallen so dramatically that they have now been overtaken by vodka. I sincerely hope that what is left of the life of this Parliament will see no more Budgets that include increases in spirit duty.
In his speech last Tuesday, the Chancellor suggested that his proposals to aid the construction industry would be of considerable benefit in the coming year. I accept that the £100 million for improvement grants, the £70 million for the reclamation of derelict land in 1983–84, the extension of initial tax allowance to services, repairs and warehouse buildings, together with the VAT and stamp duty savings and the energy saving measures, are all welcome to that most depressed industry, but, taking them all into consideration, I have grave doubts that the total will create any more than 10, 000 jobs, which comes nowhere near the 400, 000 who are unemployed in the construction industry.
There seems to be some doubt about the proposed increase of 14 per cent. in public spending on construction. On the face of it, my right hon. and learned Friend has not compared like with like in arriving at that figure. The House is entitled to know how the figure was reached, because it is believed by several professional bodies—including the Royal Institute of British Architects—that the figure may be substantially below 14 per cent. It must be remembered that, according to the Government's estimates, inflation will erode 9 per cent. of the expenditure anyway. Whatever real increases remain will do little to match the 12 per cent. cut in the construction industry's output in 1981.
I question whether local authorities will use the £1, 000 million that is expected from the sale of council houses to create new construction. I should be pleased if my right hon. and learned Friend would assure me about the steps that the Government will take to ensure that the money is used for new construction work, housing and public housing, which will lead to the creation of new jobs in that depressed construction industry. As Mr. Luder, president of the Royal Institute of British Architects, stated, when commenting on my right hon. and learned Friend's Budget:
The fact remains that whilst the Chancellor has expressed a desire to nurture recovery and spoken about the construction industry in creating jobs, his measures are less substantial than we would have wished.
Those remarks have been echoed by all sections of the industry and I hope that some means can be found to improve the position and to create more jobs during the next year.
There is also the position of farming, fishing, and indigenous industries in the rural areas. Once more they have been clobbered by an increase in duty on petrol and derv, in addition to considerable increases in road tax on cars and lorries which will have a significant effect on costs in rural areas.
Last Tuesday, my right hon. and learned Friend said that he had received representations from Scottish Conservative Members about the cost of petrol in rural constituencies. For that reason, he proposed to limit the

increase on petrol duty to 9p and on dery duty to 7p. When he announced the increases, my right hon. and learned Friend said that they would no more than compensate for one year's inflation. While that may be true in financial terms on paper, I assure him that it is certainly not the case for the rural areas. Since his previous Budget, pump prices in rural areas, including towns such as Peterhead, Fraserburgh, Turriff and Ellon, and all the villages in my constituency, have seldom varied from a low of 169p a gallon to a high of 177p a gallon. It cannot be said that pump prices last Tuesday, before the increases, were lower than at the end of last year. The new increases will add considerably to transport costs in both the private and public sectors in rural communities.
Why must the rural communities always suffer when a Government, no matter what their political colour, produce a Budget? Why must the motorist, the fisherman, the small business man, the indigenous industries and the people of the rural communities suffer every time? If there were no alternatives I could see some sense in it, but there are. I fail to understand why my right hon. and learned Friend chooses to clobber the rural areas every time, wittingly or unwittingly, when the revenue could be got from other sources. Why does my right hon. and learned Friend continue to refuse to raise the dog licence fee, which has remained the same for over 100 years? No one would object to a dog licence costing £5 a year, with exceptions being given for guide dogs to the blind, work dogs and one free licence to each elderly person.
What is wrong with taxing "space invaders", which would result in considerable revenue to the Exchequer? My right hon. and learned Friend said that duty should no longer be charged on 2p gaming machines, which he said are mostly to be found in seaside resorts. Has he ever been inside one of those arcades and seen the number of "space invaders" in use? Why should the duty on the 2p gaming machine be removed? It takes only five shots at 2p to reach 10p yet my right hon. and learned Friend is substantially increasing the licence fees for 10p machines, many of which are used in golf clubs and social clubs; they depend on the profits from those machines to remain in existence. If it is fair enough from my right hon. and learned Friend's point of view to increase the tax on the 5p and lop machines, he should also tax the 2p machines and put a £200 licence at least on every "space invaders" game.
Then there is the question of an import tax at the airport for all foreign visitors. That tax is imposed by many countries and is quite acceptable to the people there. Why do we not put a tax of £2 on every incoming visitor? The collection would be simple when people present their ticket at the airport office or hand in their cash. Why not even a national lottery similar to that successfully operated by the Spanish Government to bring in revenue to the State?
There could also be another call-in from the banks on their windfall profits. What difference would £500 million make to the many banks operating in Britain? To take tax from those sources, and from many others that I could mention, would be far better than placing an intolerable burden on those who live in rural communities and on the small businesses which depend on the trade within the communities for their existence.
I must tell my right hon. and learned Friend that I have met nothing but resistance and dismay throughout my constituency over the weekend following his proposals to increase the duty on petrol and derv. In the circumstances,


it is my intention, along with my hon. Friend the Member for Perth and East Perthshire (Mr. Walker)—I hope that we shall be supported by others who represent rural constituencies—to table amendments to the Finance Bill with a view to having the duties reduced or abolished. My right hon. and learned Friend has many other options to use instead of attacking once more all those who need to use petrol or derv because they live in rural areas.
I am prepared to support the measures that my right hon. and learned Friend has proposed to make improvements in the general recession. However, I have received such strong representations against his proposals to increase the duty on petrol and derv that I shall be unable to support the proposals when they are put before the House later tonight. I shall oppose them when the Division takes place.
My right hon. and learned Friend said that this was a Budget for industry, jobs and people. That might be as he sees it, but the people of my constituency—the farmers, the fishermen and the owners of indigenous industries—will be so deeply affected by these two impositions that I must support those people, if only to let my right and learned Friend see that the rural areas are once more the real sufferers with no hope of relief unless he has a change of heart, as he did last year. At that time, it was not only welcome but showed clearly that he understood the problems of rural areas.
I urge my right hon. and learned Friend to have compassion once more for those in rural areas, who have suffered more than those in urban areas throughout the recession. I can only speak and appeal on their behalf in the House. My right hon. and learned Friend can save them from further misery by making a concession which will mean the difference between existence and ruin. I hope that he will do so before the Finance Bill is debated. In so doing, he will earn the gratitude of terribly worried people in rural areas throughout the United Kingdom, especially in the north-east of Scotland.

Mr. A. E. P. Duffy: The tests that I wish to apply to the Budget, no matter how complex its provisions may he, will be few, clear-cut and crucial. First, will the Budget provide the desperately needed stimulus to the economy, especially to manufacturing industry? Secondly, will it maintain the downward pressure on costs and prices and thus inflation? Thirdly, will it make a decisive dent in unemployment.
The Treasury predicts growth of only 1½ per cent. this year. It is welcome news that some growth can now be expected after a fall in national output between 1979 and 1981. However, the trend in the rate of growth of the British economy is, at a conservative estimate, 1¾ per cent. a year. Therefore, the gap between our productive potential and our actual output will continue to widen. In other words, the proportion of our national resources that we waste will continue to grow.
Moreover, this year's growth—I understand that industrial output in January is down for the third month running—will only pick up the previous growth trend and will start from a much lower level of output than that which applied when the Labour Government left office. Output will not reach its 1979 level until 1984 or later. It shows no sign of closing or even narrowing the gap between actual and potential or trend output. The loss of output in 1981 alone amounts to more than the

Government's total spending on health, housing and social services combined. What a waste! What a commentary on the Government's economic policy!
The implications for unemployment are equally catastrophic. Given even modest productivity improvements and demographic change, unemployment must rise, and possibly for a few years. This implies that growth of at least 2 per cent. a year is necessary merely to stop unemployment from worsening. If, as the Government hope, productivity continues to rise rapidly, growth rates will need to be a good deal higher—possibly as high as 4 per cent., as more than one of my hon. Friends have reminded the House in quoting the TUC's study.
It is unlikely, therefore, that the underlying increase in unemployment will be halted this year. It is surprising that the Government wets, who are presumably aware of this and who had been demanding a boost of £3 billion to £6 billion, have been silenced by a mere £1½ billion injection, no matter how cleverly distributed. No doubt they are telling themselves that the Chancellor has provided as much headroom for growth as is available in British industry.

Mr. Dykes: In that context, would the hon. Gentleman concede that a number of people are on record as saying that they hope for further measures later this year?

Mr. Duffy: I should be surprised if that were not so. Indeed, I could almost specify the week in July when they will be introduced.
It is arguable that manufacturing industry's potential output has been falling since the mid-1970s because much of the physical capacity—factories, plant and equipment—has been made obsolescent or otherwise uneconomic by technological change, rising energy prices and Britain's loss of competitiveness.
That may be true for some sectors, but it is not true of the industrial firms that survive in the east end of Sheffield. I mention that area not just because much of it is in my constituency but because it still represents the heartland of our industrial economy. In the monetarist language of the Prime Minister, those firms are now lean and competitive and better equipped to face the future—at stupendous cost to their work forces and to those of firms that have gone under.
During the lifetime of the Tory Government, up to 20, 000 jobs have disappeared, most of them never to return. To what purpose? There seems to be no end to the misery and despair currently felt in Sheffield, to the slashing of the industrial and social fabric. There is no evidence of recovery, no sign of an upturn, only a prolongation of the agony of Sheffield steel and engineering.
Sheffield city council is highly critical of the Government's overall policy on industry, and particularly their private steel sector scheme which, in line with overall Conservative policy, continues to slim down the special steels sector. It seems that the idea has already gone too far and is killing Sheffield's industry. The council therefore asked the Under-Secretary of State for Industry, the hon. Member for Maldon (Mr. Wakeham), to divert some of the £22 million programme funding to create jobs and retrain redundant workers, but the Department rejected that out of hand on the grounds that
There is no point in bolstering up unviable jobs".
I do not know of one unviable job left in Attercliffe, given sensible and appropriate investment and demand


management policies. Johnson Firth Brown is probably typical of industry in Attercliffe today—struggling to survive until the upturn comes. At that firm, a meaningful partnership has developed between management and shop stewards, pulling together and equally determined to beat the market slump in the aerospace industry. But the Tory Government, who largely engineered the firm's difficulties and who, by their tight fiscal and monetary policies and by allowing the exchange rate and energy costs to appreciate out of sight have hammered Johnson Firth Brown into the ground, now refuse to help it to qualify for one penny of the £22 million aid available for the private steel industry.
The result is that the work force of Johnson Firth Brown, which numbered 4, 000 when the Government came to office, is now only 2, 700 and still falling. It has been decimated. Its morale is fragile and fear is widespread. Capable and responsible shop stewards are put in an impossible position and management and men are struggling to survive. Yet this is one firm that I should have expected the Government to be concerned to preserve. I cannot understand how the Secretary of State for Industry can sit there on the Front Bench and be complacent about the future of this former blue chip private sector steel giant whose products are absolutely pivotal to British engineering.

Mr. Patrick Jenkin: I have listened to the hon. Gentleman's remarks. I am, of course, familiar with the difficulties presently experienced by Johnson Firth Brown. However, the hon. Gentleman is inaccurate in saying that the Government have refused point blank to offer any help. I made it clear when the right hon. Member for Salford, West (Mr. Orme) and the right hon. Member for Sheffield, Park (Mr. Mulley) visited me recently that, if they could produce a scheme that would qualify for help under section 8 of the Industry Act, my Department would be very ready to consider it.

Mr. Duffy: I am grateful to the right hon. Gentleman for his reply. I understand his difficulty, because I met his predecessor in his Department and went into this and similar considerations. The right hon. Gentleman will agree—I cannot prolong this exchange because of the shortage of time—that section 8 does not provide for the situation that that firm finds itself in. If this Government are not concerned to help preserve such a firm—still prestigious in world engineering—I cannot understand what sort of firm they will be prepared to put themselves out for. The Secretary of State for Industry cannot shrug his responsibilities off on to the world recession. Considering what has been happening outside, as well as in Britain, we find that our recession has been much worse than that experienced by the rest of the world.
Britain's output has failed more. Our unemployment has grown faster and, even on inflation, we have not done particularly well. Johnson Firth Brown depends inordinately on the export trade and it has a successful export market. However, as with so many other firms in Britain, it is now in danger of being hammered by the Government's domestic policies.
If we consider 1980 and 1981 together we get a fair picture of the configuration of the recession. It shows that the total drop in output in Britain is about 4 per cent. For the OECD area as a whole there was an increase of about

2¾ per cent. There have been real achievements in the British economy over the past three years and no one could deny that. However, they have been gained at a higher price than those paid by other countries or by any of our major competitors.
It is right to concentrate on the needs of industry, which has carried the burden of the recession and on which our hopes of recovery must depend. Therefore, we welcome the provisions made in the Budget. However, there are not many, if any, hon. Members who believe that a net addition of £1·3 billion to the PSBR is anything more than a sop. It will do little, if anything, for the 3 million unemployed. The highest hopes we can entertain arise not so much from the Budget judgment, but from the lower oil prices that will inevitably lower the world inflation rate and help to bring down the value of sterling to a more realistic level which should help our exporters and, consequently, our balance of payments.
However, there are dangers in that aspect because, even though United States interest rates—about which we have heard much in the debate—are now coming down, there is no evidence that the United States is coming out of recession. The position is quite the opposite. There is a downward shift in United States interest rates probably because the demand for money is contracting.
Does the Chancellor think that the United Kingdom alone will lead the world out of recession? To begin with, that will betoken a commitment to falling interest rates in the United Kingdom, irrespective of what is happening to the exchange rate of the pound. It will almost certainly mean that the pound will slip below $1·80, as it did last Friday. That, in turn, tends to put up prices; about 20p in the pound of consumer spending goes on imports. As a result, the Budget may become far more "inflationary" than almost any one so far suspects. Nor can we assume that the present level of exports will be maintained, much less increased. Markets are becoming much more difficult, especially the United States, which is a far more significant market for us than it is for the rest of Europe, even though more than half of our exports now go to Europe.
We may very soon see a trade war of a severity that we have not experienced since the 1930s. A notable source of worry will be the extent to which we can maintain demand at home. Of course, that turns on an assumption of consumer strength and, therefore, on personal disposable income, levels of wage settlements, taxation levels and, ultimately, the Chancellor's Budget judgment.
The economy clearly showed a need for a Budget that would provide the necessary stimulus to bring output nearer to its trend level, to bring demand nearer to supply and, above all, to make some decisive dent in the unemployment figures. The most persuasive argument of the Chancellor of the Exchequer for this slow and steady course that he prefers is that it will lead without risk to better things in 1983–84. Starting from a lower inflation rate and with the wheels of industry turning, the right hon. and learned Gentleman could then risk a faster growth rate. But is there not scope available to him to do more?
We have heard from my right hon. Friend the Member for Stepney and Poplar (Mr. Shore) how it can be done, and I shall not rehearse his argument. We have heard that there is a surplus on the current account of the balance of payments which is two and a half times greater than the 1980 surplus. Even Japan's surplus in 1981 may well have been one-half or one-third the size of Britain's. We have


also heard some of the possible spending heads which the Chancellor of the Exchequer might have looked at. Again, because of time, I shall not rehearse them.
I understand the difficulties. I understand the objection to interest rates. I understand the effect that they may have on inflation. I understand the objections of the right hon. Member for Down, South (Mr. Powell). But with the multiplier at work, the package that has been put forward by the Opposition could boost the economy. This would feed back into higher Government revenues. As a result, such a reflation package—which is what it would be—could feed through an extra £5 billion perhaps in Government revenue. The net effect might then only be as small as £1½ million on the PSBR—and have not we heard that figure repeatedly in this debate?
This is not a Budget whose tax changes will make much difference to output, inflation or unemploymnet. One wonders how many of those Government Back Benchers who enthused over the latest effort of the Chancellor of the Exchequer on Tuesday will be of the same mind by late July. We see already from the judgments of various hon. Members today a good deal less rapture than they demonstrated last Tuesday. We see already the beginning of a sober reflection.

Mr. Alan Haselhurst: The two tests which I apply to the Budget are whether it will help industry and, indirectly, whether it will directly ease unemployment. The House may deduce from that that I consider unemployment to be the crucial question facing the Government and society as a whole.
My right hon. and learned Friend the Chancellor of the Exchequer was right to put the accent on help to industry. It is vital to improve profits and to create scope for investment. That is the way to develop job opportunities, but it is the long-term way. The recovery of industry, much though it is to be desired, may not do much to dent the unemployment total in the short term. Thus the question is whether the help given in the Budget will be enough to reduce the unemployment total. I should be more reassured if my right hon. and learned Friend could show his readiness to take further measures if the output figures of industry falter. The figures that we have to date are still not very good.
A return to expansion will not in any case suffice to make a big enough impression on unemployment. There are still pockets of inefficiency to be squeezed. There may still be casualties of recession for whom the oxygen of an expanding economy will come too late. There is also new technology to be accommodated. So the second test is what the Budget does directly to help the jobs total.
My right hon. and learned Friend has come up with something new. Early in his statement he spoke of a community workers' scheme, although he did not term it that. I suppose that we are all finding our own nuggets in the Budget. My right hon. and learned Friend, having referred to £150 million, excluding supervision costs, to support 100, 000 people, went on to say:
We should indeed be ready to back this kind of development on an even larger scale if the demand is there."—[Official Report,  9 March 1982; Vol. 19, c. 732.]
I hope that I shall not be thought grudging if I react to that important sentence with mixed feelings—pleasure that the door appears to be opening more generously to

measures for dealing with unemployment, coupled with some dismay that we are still in the realms of a piecemeal and fragmented approach.
We have had the new training initiative which, fairly or unfairly, has not been welcomed entirely favourably. A task force in the Manpower Services Commission is examining the new training initiative to see what more can be made of it. It is no secret that it is looking at the potential of combining resources in training and education.
We now know that more money is available for this purpose. I should like to see all this money brought together. We should have a grand design. That will be wholly in accord with the purpose of the Budget. We are now so near to getting it right. There is growing support for a new overall approach for the 16 to 19-year-olds. Money does not seem to be the difficulty it was. Let us show that we are capable of meeting the challenge, and recognise that the Budget alone cannot cure the problem.

9 pm

Mr. Robert Sheldon: The importance of the four days of Budget debate lies in the way that they start the process of understanding what the Chancellor of the Exchequer is attempting to do. The judgment that is made on Budget day is rarely the same as that held some time after our procedures are under way. The process of debate, which continues into the various stages of the Finance Bill, influences the House of Commons and, subsequently, the country.
It is not difficult to predict that when we debate Third Reading—some time in July—the Budget will be seen to have been less relevant to our economic problems than it seems even now.
The Budget has a great deal of detail in it—not much strategy, but a lot of detail. The first question that we must ask is: what has happened to the medium-term financial strategy? We know that originally M3 was to be the way in which inflation would be reduced, and 364 economists said that was nonsense. Last week, my right hon. Friend the Member for Ebbw Vale (Mr. Foot) asked which economist agreed with the Prime Minister. The right hon. Lady said that Professor Walters agreed with her. Of course, he is employed by her. The Prime Minister also said that Professor Patrick Minford agreed with her. He thought that monetarism would not lead to any reduction in output, so he is a peculiar economist to choose for support. For my part, I thought that it was Dr. Alan Budd who agreed with the Prime Minister. He apologised for the mistake that he made when giving advice on the level of the pound.
At one time the Government took a simple view of the world. They thought that money supply influenced M3. Sam Brittan, writing in the Financial Times,  called the Treasury Ministers "uncomprehending monetarists". I agree with him. They believed it all. They presented M3 as a docile, arithmetic series, declining steadily year by year from a central estimate of 8 per cent. in 1981 to 7 per cent., 6 per cent., 5 per cent., and then, presumably, 4, 3, 2, 1, zero, with lift-off for growth. Treasury Ministers cannot believe that now. As the right hon. Member for Sidcup (Mr. Heath) said, monetarism is dead. I noticed that the right hon. Member for Down, South (Mr. Powell) did not seek to resuscitate it. The right hon. Member for Sidcup is right. We have won the intellectual battle against


dogma and we look forward to the further successes that may come when the Government understand the workings of the economy a little more fully than they do now.
Years ago—to introduce a personal story—I worked with a fellow engineer who, when he made a mistake, produced his favourite motto—"What cannot be cured must be obscured." He then proceeded to alter the technical drawings from which he had worked. That is what the Government are attempting to do. From the simplicity that they once had of a steadily declining M3, which formed their blueprint for the economy, the Chancellor of the Exchequer has now replaced it with two kinds of M1, as well as sterling M3, PSL1, PSL2, interest rates, exchange rates, and a new one, Mo, with a wide base. The Government have obscured and obliterated their plan designed for the rebuilding of the British economy. My former colleague would have been proud of the Chancellor.
What is the Government's economic strategy now? The Chancellor will be forced to answer that question at some stage—if not here, then when he appears before the Treasury and Civil Service Select Committee. The House of Commons and the Select Committee would like to know. In its last report, published on 16 December 1981, the Select Committee said that Government actions
throw doubt on the underlying Strategy as it was promulgated at the time of the Budget in 1980. We therefore believe that the time has come for a major re-statement of the Strategy, so that Parliament and public may be fully informed of the economic objectives which the Government now have set.
That is not an unreasonable demand. What are the Government's aims and objectives at present? My right hon. Friends the Members for Heywood and Royton (Mr. Barnett) and Battersea, North (Mr. Jay) talked about the PSBR, and the Financial Times called it a "sacred number". We know now, if we did not know before, that it has more in common with the reality of deflation. The reduction of the PSBR year by year, together with high interest rates and the medium-term financial strategy, has turned this into a classic exercise in deflation.
Deflation limits activity, reduces demand, allows firms—many of them good firms—to go bankrupt, destroys jobs, brings back the fear of unemployment, hopes that pay settlements will be reduced, that people will be disciplined and that the happy days of the 1930s will return, with income tax at five shillings in the pound, low surtax and low estate duties so that a good time can be had by the few resting on a substratum of misery for millions of our people. The reason for all that is quite clear. The Government must restate their strategy, and we look forward to seeing it.
Last Wednesday, when we looked at the income tax proposals in the Budget, we saw the discomfiture of the Chief Secretary to the Treasury. It was on a fundamental point which can be put as a simple question. As a consequence of this Budget, are people better or worse off? At the very least, the House is entitled to an answer to that question. One cannot ask a much more basic question than that.
The Chief Secretary thought that, after tax and national insurance contributions, the effect on the individual was beneficial, and he said so. The Opposition, supported by all the commentators on this subject, agreed with the conclusion of Nick Morris and Andrew Dilnott of the Institute of Fiscal Studies—that almost everyone in Britain

will pay more tax after last Tuesday's Budget and that what the Chancellor gave away in modest tax cuts he more than took away in national insurance contributions.
The Government are claiming to cut taxes when, in fact, they are increasing them. This is more important than even that might suggest, because a major and continuing claim by the Government was that they were a tax-cutting Government. That assertion was made not only before and during the general election, but it has been repeated regularly since then. On 30 April 1979, the Chancellor said:
We shall make substantial cuts in income tax. And we shall … be raising tax thresholds as well.
After the election, on 25 July 1979, he did not go back on that. He said it in a slightly different way when he stated:
A central theme in our General Election campaign was the need to bring down the burden of taxation on ordinary people … We wanted to revive the economy, to get it growing again".
It is reasonable, proper and, indeed, an obligation to compare aspiration with achievement. If we examine those on below average earnings, those on average earnings and those with up to twice average earnings, we see that they account for over 90 per cent. of all taxpayers. Income tax and national insurance contributions, as a proportion of their gross earnings, have gone up year after year, and that increase in taxation does not even take account of the introduction of a 15 per cent. VAT rate, the sole purpose of which was to shift taxation on income to taxation on expenditure. The people of Britain have had both—higher taxes on incomes and higher taxes on expenditure. The increases came in 1979, 1980, 1981 and, now, in 1982. Each year the message has been the same.
Last year the Government, who are firm believers in the principle of indexation, and who are anxious to introduce new methods of indexation, failed to implement the one measure that was already on the statute book—the Rooker-Wise amendment which was moved so eloquently and ably years ago by my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) who ritually takes his bow at this stage in our proceedings. As a result of the Government's failure to implement that measure, the taxpayers forwent £1, 900 million in 1981–82. Against that, the £200 million—less than 10 per cent.—has failed to make good that loss.
As a result of the failure to raise thresholds we now have the lowest threshold of income tax of any of the Western industrialised countries. As a result of the Government's scrapping of the reduced rate band of 25 per cent., which provided an easier passage for those just coming into taxation, we have the highest initial rate of taxation among the Western industrialised countries. That is an unenviable record for any Government but it is even more so for a Government who are committed to reducing taxation.
We ought not to forget the so-called philosophical reasons advanced for the cutting of taxes. In a speech on 25 July 1979, the Chancellor of the Exchequer said that the reason why the Government wanted to reduce taxation was that:
We wanted to revive the economy, to get it growing again … We wanted to bring back incentives.
I suppose that the only acceptable consequence of the Government's annual Budgets which year after year imposed increased taxes on the British people is that we are now being spared the glutinous hypocrisy about


incentives. In this miserable catalogue of increases in indexation which has been advanced by the Government not all people have fared in the same way.
As my hon. Friend the Member for Ogmore (Mr. Powell) pointed out, the Chancellor of the Exchequer is offering considerable relief to higher taxpayers. On capital gains tax indexation, the Chancellor is offering £150 million. We must note that it is said that the eventual effect of that is likely to be substantial. There are those who think that so substantial might be the relief offered that the very future of the tax might be in danger. The Chancellor of the Exchequer is also offering relief of about £400 million to the higher rate taxpayers. He is offering, separately from indexation, capital gains tax relief of £105 million, and he is offering relief on capital transfer tax of £90 million. A total of £750 million is being handed out to the better off in our midst.
On top of all that, we had last year's emasculation of capital transfer tax, the highest rates of income tax and the Government's actions on investment income surcharge, capital gains tax and the 10-year wiping out of liabilities. All that is making sure that the better off in our society are hardly aware of the problems and difficulties caused to millions of our people who not only have low pay, but are threatened with the troubles of unemployment. One class of taxpayers has done well out of the Government, and it is no surprise that it is the wealthy and the inheritors of wealth.
We note that the Budget has been very much an indexation Budget. Besides introducing new forms of indexation on capital gains tax and capital transfer tax, it has indexed the sale of gilts to the general public. I heard what the hon. Member for Croydon, South (Sir W. Clark) said about that.
It is surprising that a Government who claim success in reducing the level of inflation should provide the means of avoiding the consequences of inflation by extending the principle of indexation. The hon. Member for Croydon, South warned that if we index the gilts into the next century, we may give those who come after us an unknown burden, because it is difficult to know what will happen over a score of years.
Another aspect that ought to be mentioned is that OPEC countries have been trying for years to get an index linking for their sales of oil. They can be in their monopoly position and increase prices through producing an artificial shortage of oil whenever they wish. If, at the same time, they are able to obtain index-linked securities for their oil, we may find ourselves on the ratchet of not only national, but international inflation. That is a matter which we should seriously consider.

Sir William Clark: Do I take it from the right hon. Gentleman's speech that a Labour Government would be directly opposed to the issue of index-linked bonds?

Mr. Sheldon: One cannot say what might be the situation at the time. What matters is how these things continue. I share the hon. Gentleman's apprehension, and I thought it fair to draw the House's attention to that reasonable apprehension, which everyone ought to feel. We cannot give index-linked bonds into the next century without much greater debate about the debt that our children and grandchildren may have to pay overseas purchasers of those bonds.
One omission among the many taxes that the Chancellor might have considered was the bank tax, which

raised £400 million in 1981–82. This year the Government gave a warning to the banks, but provided no further taxation. We have to ask what that warning was about. Had the banks been misbehaving themselves? What was the nature of the threat that induced the Chancellor to quote Burke by saying:
There is, however, a limit at which forebearance ceases to be a virtue."—[Official Report,  9 March 1982; Vol. 19. c. 749.]
Among those of us who listened to the Chancellor of the Exchequer for two hours, that quotation was received with some sympathy. At least I understood the point that he was trying to make. The banks have been lending overseas at abnormally low interest rates, at the expense of the United Kingdom taxpayer. The problem about banks is only one of a number of avoidance devices that have sprung up as a result of the removal of exchange controls. This single, wanton action has played its full part in damaging our economy. The right hon. Member for Sidcup said, rightly, that because of it, we have allowed United States' interest rates to dominate ours. I shall not go along with the solution that the right hon. Gentleman put forward. I agree, however, about the problems that now face us through our being more closely tied with United States interest rates as a result of our abolition of exchange controls.
We have deprived British industry of investment that has gone overseas. We have deprived British industry of the independence of our operation of interest rates. Now it is discovered that we have additionally given tax advantages to those companies that have harmed our economy so greatly. A major new tax avoidance industry has grown up on the back of the abolition of exchange controls. As a result, the Inland Revenue has lost hundreds of millions of pounds, possibly more. No one yet knows. It will be years before the full measure of this folly is properly computed.

Mr. Bruce-Gardyne: Will the right hon. Gentleman say, in the light of his remarks about the abolition of exchange controls, whether he thinks that if exchange controls had been retained the exchange rate would have been higher or lower since that time?

Mr. Sheldon: There are many ways of reducing the exchange rate. If the hon. Gentleman is limited to reducing interest rates only through exchange controls, he has a very limited number of weapons in his armoury. He has interest rates. He has the Bardepot plans. He has talking down. There are a whole host of ways of operating, as the Committee of London Clearing Bankers sets out in its memorandum on the subject. If the hon. Gentleman is limited to exchange controls, he makes far too little use of the honourable position that he occupies.
Two lessons in this century have burnt deep into our national consciousness. One was the disaster of war and the manner in which we drifted into it. The second was the misery and degradation of 3 million people forced into unemployment in the inter-war years. The situation of 1980 to 1982, as my hon. Friend the Member for Darlington (Mr. Fletcher) has shown, is coming to resemble, uncannily and horrifyingly, that of 1929 to 1931. So similar are the two periods appearing that there is an increasing attempt to portray the 1930s as a time of recovery and strength. The generations who lived through those years did not see them in that light.
The minor variations in economic activity did rot prevent the mutilation of millions of our fellow citizens


and the disfigurement of their lives. That produced a division in our nation that continues. At least the cause of the 1929–31 economic collapse, while not forgivable, can be comprehended. It was the middle of an international crisis. The balance of payments was in ruins. Those difficulties, while not insuperable, do not exist today.
Our external position is favourable. We have North Sea oil, and, as the right hon. Member for Chesham and Amersham (Sir I. Gilmour) has remarked, we have a balance of payments surplus. We have spare capacity and large numbers of unemployed. There is no danger of overheating. Why do we not put all these assets to work? As the right hon. Member for Sidcup stated, companies are prepared to produce for the market. Companies are prepared to invest for the market. But there is no market and there is no demand. The Government are not providing the demand. They are not providing the stimulus. As the Financial Times commented on 25 February:
The Government believe that fiscal stimulus is only in order when the economy is recovering spontaneously.
The Chancellor of the Exchequer is like the life saver
who looks with unconcern on a man struggling for life in the water, and, when he has reached ground, encumbers him with help.
That help needs to be given now.

Mr. Cormack: That is Dr. Johnson.

Mr. Sheldon: The hon. Gentleman has the quotation right. While the House mourns "Rab" Butler, it is fitting that we turn to a document produced under his influence. I refer to the 1944 White Paper. It was agreed by Conservative Members, Labour Members, Liberal Members and independent Members. It has been repudiated by the present Government and heavily qualified by Roy Jenkins speaking for the alliance. The White Paper said:
The Government accept as one of their primary aims and responsibilities the maintenance of a high and stable level of employment after the war.
It went on to state:
The Government are prepared to accept in future the responsibility for taking action at the earliest possible stage to arrest a threatened slump. … Desirable public investment should actually expand when private industry is declining and should contract in periods of boom.
That decision to support those principles led to the greater social harmony in the quarter of a century after 1945, which contrasted so strongly with the 20 years before 1939.
The major industrial news today is that that consensus is not now present. My hon. Friend the Member for Glasgow, Springburn (Mr. Martin) said that today 600 of his constituents have become unemployed as a result of the closure of a factory in Springburn. My hon. Friend the Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) says that 500 jobs in his constituency have been lost today. Such waste goes on day by day.
The people who are coming to play an important part in our society are the new receivers and liquidators of our troubled industry. Mr. MacKay rushed to save Laker Airways. Sir Kenneth Cork, following the liquidation of the Rolls Razor and Vehicle and General companies, is now trying to save De Lorean. In an earlier age they might have been heroes trying to save the Empire. The list of companies in difficulties is large and growing. One cannot

reduce output by 17 per cent., have interest rates at about 15 per cent. and avoid the collapse of good and valuable companies.
Business failures over the past two years have been of monumental proportions. Failures in 1981 in retail and wholesale firms, as studied by Trade Indemnity Co. Ltd., increased by 27 per cent. Failures in the furniture and upholstery trade increased by 110 per cent. Failures in textile and clothing increased by 129 per cent. and failures in engineering increased by 130 per cent. A shameful aspect of such waste of good companies—and there are many in my constituency—is that they close when their goods and services are needed.
Brickworks are closing down and on our television screens we see explosive charges placed under the chimneys and decades of work collapse before our eyes. This is when bricklayers are out of work, when our inner cities decay and people in them riot.
Unemployment in Britain is at a record level among OECD countries. The United Kingdom topped the list in 1980 at 11·7 per cent. That figure has by no means reached its peak.
The Budget gives no assistance to people who are still unemployed. Their position will be made worse. When the Chief Secretary was asked whether the Budget was deflationary he said that that was
a fantastic proposition."—[Official Report,  10 March 1982, Vol. 19, c. 883.]
Mr. Samuel Brittan, in today's Financial Times,  called the Budget contractionary. I am happy to agree with him.
There is another simple way of looking at it. What will the Budget do to output and jobs after three years of savage deflation? We must remember that deflation is a cumulative process, and that each year of deflation is built upon previous years of deflation and adds to the burdens. After three years of savage deflation, output is expected to grow by 1·5 per cent., which is much less than the level of productivity growth.
According to the White Paper, unemployment is expected to increase by 300, 000 a year, and the level of 3·5 million unemployed will be maintained throughout 1982, 1983 and 1984. Labour Members consider that that is wholly unacceptable. We intend to start on the path to full employment and we shall vote against a Budget that produces yet another deflationary term from which there seems to be no escape under the present Government.

The Chancellor of the Exchequer (Sir Geoffrey Howe): It is always a pleasure to follow the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), particularly in this year, for, having studied the text with some care, I find that he is probably almost the only member of the Opposition Front Bench whose reputation has not been savaged and ravaged by his right hon. Friend the Member for Heywood and Royton (Mr. Barnett). In that respect, friendship is more than a term of art. The House will recollect that for many years they were known as the "heavenly twins".
I found particularly engaging the description in the right hon. Member for Heywood and Royton's book of the way in which some 20 or 30 years ago the two right hon. Gentlemen, with other radical Left-wing friends—most of whom have now defected to the SDP—joined together to establish a Left-wing coffee shop in Manchester where Left could speak unto Left with understanding and


friendship, and where they could eat and meet together. Sadly, after a very few months those premises were neither worth meeting in nor worth eating in, having incurred a substantial loss, which the two right hon. Gentlemen shared between them. It is nice to know that they began as they succeeded in going on.
The arguments advanced by the right hon. Gentleman were a rather pale echo in many respects of those that we heard at the beginning of the debate from the right hon. Member for Stepney and Poplar (Mr. Shore), who described, in measured, cautious tones, how the medium-term financial strategy—as he put it—was throttling the economy. I return to the engaging analysis that he adopted, borrowing metaphors from the courts. The question he put was:
Is it not a natural and probable consequence that, regardless of circumstances, a Government pledged to reduce their borrowing requirement year by year will reduce demand in the economy…?"—[Official Report, 10 March 1982; Vol. 19, c. 877.]
I must tell him that the answer to that question is "No". In the real world, as distinct from the one where the right hon. Gentleman dwells, the "natural and probable consequence" of lower borrowing is lower interest rates and thus increased activity. Indeed, this week's experience has shown the House that the market effects of an announced intention to continue to reduce borrowing can come fairly quickly.
The right hon. Member for Stepney and Poplar no doubt retains his engaging certainty that what he said last Wednesday was right. He always has that air of certainty of which somebody said of Lord Macaulay:
I wish I was as sure of anything as he is of everything".
He may not have noticed, but out in the real world last Thursday the clearing banks lowered their base rates. Out in the real world last Friday the building societies decided to reduce their mortgage rates by 1½ full points. That was a "natural and probable consequence" of the Budget and only one reason why it was so widely welcomed.
Suppose that in my Budget Statement I had announced an intention to raise the PSBR by £5·5 billion, or whatever figure the right hon. Gentleman likes to prescribe. Does he honestly believe that those interest rates would have come down in that way? What does he think would have been the "natural and probable consequence" of the kind of reflationary package that he commends to the House? [HON. MEMBERS: "More jobs".] We have no need to speculate, for in 1974–75 we had the experience of the right hon. Gentleman's own Government. His right hon. Friend the Member for Leeds, East (Mr. Healey) was then borrowing some 9 per cent. of GDP. In 1975–76 he was borrowing some 9½ per cent. of GDP. What happened? Inflation rose to 25 per cent., unemployment doubled in two years, the pound fell to $1·57, and the Labour Government were off to the International Monetary Fund. In the words of a figure revered by the Leader of the Opposition, "Why read the crystal when we can read the book?"

Mr. Shore: Why, indeed, read the crystal when we can read the book? For three years now we have had the persistent pursuit of policies aimed at reducing public expenditure and reducing the PSBR, apparently in order to lower interest rates, yet today we have higher interest rates than we had three years ago. We have higher interest rates than we had last year. Production is down by nearly

18 per cent., according to today's figures, and unemployment is up to nearly 3 million. Is that a record of success for the Chancellor's monetary policies?

Sir Geoffrey Howe: The right hon. Gentleman must understand that interest rates are falling as a result of the policy measures announced last week and that inflation has been halved as a result of the policy measures we have introduced. The truth is that the policies and prescriptions that the right hon. Gentleman offered to the House today were tested to destruction by the Labour Government of which he was a member.
I should like to take the point a little further:
the Government have pursued a medium-term strategy whose objectives are to reduce the rate of inflation and to achieve a sustainable growth in output, employment and living standards, based on a strong expansion in net exports and productive investment. In order to secure this strategy, the Public Expenditure White Paper indicated the Government's intern ion in the years ahead to reduce the share of resources taken by public expenditure. It is also, and I must stress this, part of this strategy to reduce the public sector borrowing requirement so as to establish monetary conditions which will help the growth of output and the control of inflation. The Government see this strategy as the basis for a programme which will firmly establish the recovery of the nation's economy, and will also allow the United Kingdom to make its proper contribution to the stability and prosperity of the world.
The words that I have just quoted are not my words; they are the words of the right hon. Member for Leeds, East. I am quoting from the letter of intent that he was obliged to send to the IMF on 15 December 1976. I commend those words and that insight on medium-term strategy, as the right hon. Member for Leeds, East has described it, to the Labour Party. It must be within the party's memory that it was only when it adopted those policies that the tide began to turn.
The rise in unemployment under the Labour Government did not slacken during the years of high spending but only from the time when the Labour Government, at the insistence of the IMF, adopted a medium-term financial strategy with three key factors. Those factors were, first, the establishment of monetary targets; second, the reduction of public borrowing; third, the reduction of public expenditure.
I do not want to widen the divisions in the Labour Pansy or to add to the difficulties of right hon. Members, but it would be a considerable service if the right hon. Member for Leeds, East were to embark on a course of Chinese mind-reading for the benefit of his right hon. Friend the Member for Stepney and Poplar. If we are to judge from the proposals offered by the right hon. Member throughout the debate, we must greatly regret his condition.
The right hon. Member told the House that he saw no convincing reason, nor any convincing evidence, that an increase of £5½ billion in the PSBR could be achieved only at the cost of rising interest rates. If he believes that, he will believe anything. In the real world the significance of holding next year's borrowing requirement down to £9½ billion, rather than the £15 billion that he would commend, is well understood. It is that that brings results and the measures proposed in his characteristic contribution to the debate would not serve the interest of the country well.
There is another feature that was a common aspect of the right hon. Gentleman's speech, and that of the right hon. Member for Ashton-under-Lyne—the recurrent insistence on the merits of exchange controls. Last Wednesday the right hon. Member for Stepney and Poplar told the House—what he said was echoed this


evening—that it was the intention of the Labour Party to restore exchange controls the moment that it had the opportunity to do so. That opportunity will be long enough delayed but it is difficult even then to understand his purpose.
The Labour Party Front Bench simultaneously criticise the Government for allowing sterling to rise to a level that industry found uncomfortably high, and, by abolishing exchange controls, undesirably assisting outward investment. Surely one thing that must be clear is that the abolition of exchange control meant that the exchange rate was lower after 1979 than it would otherwise have been. I fail to understand how the Labour Party can reconcile those two propositions.

Mr. Shore: The right hon. and learned Gentleman is not treating the House seriously. He knows perfectly well that even with a regime of exchange control as we had for 30 years, until 1979, factors other than freedom of capital operated on interest rates. Sometimes we had high interest rates, sometimes we had low. All kinds of factors were involved. The idea that either the exchange rate or the interest rate is uniquely determined by the free movement of capital is nonsense.

Sir Geoffrey Howe: The right hon. Gentleman has not addressed himself to the argument. I am making a simple point. On any objective analysis the abolition of exchange control permitting freer movement of capital made the exchange rate, as he would have wished it, significantly lower than it would otherwise have been.
There are other things that can be done. For example, the right hon. Member for Ashton-under-Lyne said that we could talk down the exchange rate. We could adopt the policies recommended by the Labour Party. We could embark upon a policy of massively irresponsible borrowing and, as they showed only too clearly in 1976, we could reach the condition where one newspaper article by Mr. Malcolm Crawford could knock seven cents off the exchange rate. Of course there are a thousand things that we could do but the point that I am making is directed to the prescription of the right hon. Gentleman for the re-emphasis of exchange controls. If one did that it would certainly damage the desirable increase in outward portfolio investment. It is desirable because it is building up an important source of overseas earnings for the years beyond the peak of North Sea oil production.
That would change the composition of total capital outflows. It would not alter the total, as the right hon. Member for Down, South (Mr. Powell) pointed out. Exchange controls cannot protect Governments from the exchange rate consequences of irresponsible domestic policies. That too is a lesson from 1976 which the right hon. Member for Stepney and Poplar ought to have learnt by now. Exchange controls did not save his Government from a slide of 12 per cent. in the value of sterling in one month, September 1976. It did not save the right hon. Member for Cardiff, South-East (Mr. Callaghan) when he was trying to fight off devaluation in 1967.
There are reasons for focusing some of our attention on some aspects of the outside world. My right hon. Friends the Members for Sidcup (Mr. Heath) and Worthing (Mr. Higgins) and my hon. Friend the Member for Devizes (Mr. Morrison) all had something to say about their concern at

the high and volatile level of interest rates in the United States. I fully agree about the significance of that and said so in my Budget Statement last week.
In discussions with my colleagues in the European Community in Brussels today, I found that they shared the same perception. The question is: how are we to deal with that situation? No one, either inside or outside the European monetary system, is disposed to argue that it is possible for us to cut ourselves off from those effects. The sheer volume of mobile non-domestic capital moving around the world makes that impossible. It is therefore important for us to understand the nature and cause of the problem, and the nature and cause of anxieties in the United States. The United States is striving to reconcile its fight against inflation, and we in this country have a supreme interest in its success in that fight. Thus there is a need for firm monetary policy compatible with the size, actual and prospective, of its budget deficits. My right hon. Friend the Member for Sidcup correctly identified the importance of its budget deficits in this argument. It will continue to have high interest rates until those deficits are brought under control.
The message that we must convey about our interest in those matters is one that is best conveyed, not by strident public demarche, but by close and regular contacts with our European partners and our counterparts in the United States. I am confident that they are fully aware of our views in that respect.
We must ensure that the size of our own borrowing, in Europe as well as in the United Kingdom, does not increase the threat of our exposure to unduly high interest rates in this country. That is an important reason for securing a lower borrowing requirement in this country as a result of the Budget strategy. It is an important reason also why the Social Democratic Government of the Federal Republic of Germany have set themselves precisely the same objective. This monetary discipline and the determination to defeat inflation that we have shown domestically add weight to our voice when it is heard internationally. No one would listen to us if we were to drop our determination and abandon that discipline.
I find it particularly ironic that the Opposition Front Bench should argue with apparently equal conviction for higher deficits here while at the same time arguing against higher deficits in the United States. Surely what is sauce for the goose is also sauce for the gander. We must put and keep our own house in order if we are to offer convincing advice to our neighbours.
It is for that reason that we have directed the strategy of this Budget to the improvement of the prospects for employment in this country. It is intrinsically surprising to find a number of Opposition Members, including the Leader of the Opposition and his right hon. Friend, arguing, apparently, that by concentrating our assistance on business and industry we have diverted help from the unemployed. Nothing could be further from the truth. Exactly the opposite is true.
I take this opportunity to deal with one particularly damaging distortion which was made by the right hon. Gentleman. The public expenditure White Paper says that it has been provisionally assumed that unemployment on the narrow definition would average 2·6 million in 1981–82 and 2·9 million the year thereafter. The White Paper went on to say, in the very next sentence, as in all earlier White Papers, that this was neither a forecast nor a prediction, and that if developments on pay and the


world economic recovery were favourable there was a reasonable prospect that unemployment levels in later years might turn out lower than had been assumed.
In his television broadcast on the day following my Budget Statement, the right hon. Member for Stepney and Poplar quoted the sentence containing the figures, but he omitted the next sentence. He argued explicitly that this Government see unemployment sticking at 3¼ million for the foreseeable future. As the right hon. Gentleman well knows, or should have known, that statement was wholly without justification. It was a quite unworthy observation.

Mr. Shore: The right hon. and learned Gentleman has made a direct accusation. However, I read from the second volume of the Government's expenditure plans. On page 50, paragraph 14 of the Blue Book, the right hon. and learned Gentleman states:
It was also assumed that the number of unemployed persons (excluding school leavers etc.) would average 2·6 million in 1981–82 and 2·9 million in 1982–83 and subsequent years.
That is the precise form of words that I used. What is the right hon. and learned Gentleman complaining about? Is he complaining that we use his words?

Sir Geoffrey Howe: The right hon. Gentleman knows well that the use of assumption is hallowed by the practice of previous Governments—[Interruption.] He knows perfectly well that the right hon. Member for Leeds, East was asked about this matter in the last Parliament by the Social Services Committee, presided over by the hon. Member for Wolverhampton, North-East (Mrs. Short). He said that he stressed that the figures were not a forecast of unemployment levels and represented a working assumption for the purpose of constructing expenditure projections which are increasingly provisional for the later years of the survey. The right hon. Member for Stepney and Poplar did not cite a point that is made in the White Paper. It stated that if developments on pay and the world economic recovery were favourable, there was a reasonable prospect that unemployment levels in the later years might turn out lower that had been assumed. That is a valid statement of the prospect.
The indications now point to improved employment prospects. Competitiveness has improved. Profitability started to improve last year. Pay demands have moderated, and the Budget measures, coupled with the oil price fall, should also help in the same direction. What matters most for future jobs is the future level of inflation. The firm prospects of inflation dropping to single figures during the course of this year and continuing to fall next year is the best news around for those out of work. It is worth remembering, as Mr. Sidney Weighell recently pointed out, that "Labour is the party associated with the highest rates of inflation ever recorded in the United Kingdom; that Labour is the party whose last Government was observed to collapse under the failure of its counter inflation policy." Talk from the Opposition Benches about alternative strategies will carry no conviction for those in and out of work unless and until the Opposition produce convincing evidence—wholly lacking so far—that they have a viable plan to defeat inflation. There is no such evidence before the House now.
I turn to the new proposal for unemployment, outlined in the Budget speech. The proposal for a community work scheme—which my hon. Friend the Member for Saffron Walden (Mr. Haselhurst) also welcomed—is a scheme with a simple and sensible objective: to bring together the

work that needs doing, which would otherwise not be done and those who are unemployed and who wish to use their time constructively. For several months many people have canvassed the obvious attraction of that idea and one might have hoped that it would have been welcomed by the Opposition, and not—as it has been—talked down.
Surely the Opposition must be aware that there are any number of jobs that people cannot now afford to have done. The new scheme will provide a means of doing them. Is that something to be deprecated? Would it be better to leave the jobs undone and to leave idle those who want work? Of course not. The new scheme offers the chance for the unemployed voluntarily to use their time in a way that helps others and helps them. It attempts to mobilise enthusiasm and a willingness to work. The scheme can be extended beyond the degree outlined in my speech to the House last week. I made it plain that if demand for the scheme is substantial, it can be expanded to meet it.
In the Budget, the Government have given—as they should have done—priority to industry. It is right that we should do so against the background of a long decline in profits. As we know, in the last year the real return had fallen to a very modest 2 per cent. I was pleased that the right hon. Member for Stepney and Poplar began to take some interest in his speech last week in the importance of profits. In this Budget, it was necessary for us to take action to provide immediate relief to costs, and to provide new incentives to businesses to expand and take on more labour. The Budget contained measures to do exactly that—measures in the form of an enterprise and small firms package. Seventy-six different proposals have been introduced to help businesses in the past three Budgets and all but five of those were designed to help existing businesses as well as to create new ones. There were substantial reductions in capital taxes to improve the prospects for business enterprises. There was a construction package worth £140 million to aid the prospects for home improvement and derelict land reclamation. There were better capital allowances for housing to let and improvements in the small workshop scheme.

Mr. Shore: The Chancellor knows that the index of industrial production, which was published today, shows that industrial production is down for the third month running. Has that led him to revise his judgment that the economy is improving and bottoming out? Does he not believe that his modest measures fall far short of what is needed to assist the recovery of British industry?

Sir Geoffrey Howe: Has it entirely escaped the right hon. Gentleman's notice that figures in recent months, as we clearly foreshadowed, have been affected downwards by the severe weather and by industrial disputes in the car and railway industries? Is it not time for the Labour Party to recognise that it could play a useful part by trying to diminish the level of industrial disputes instead of always doing the opposite? If Labour Members examine the figures published today, they will see a clear statement that the underlying levels of output remain substantially above their low points last spring. Despite the effects of strikes and bad weather, manufacturing output in the fourth quarter of last year was between 2 per cent. to 3 per cent. above the low figure recorded in the first quarter of the year. If the right hon. Gentleman, instead of concentrating


entirely on the gloom that he can scavenge from the scene, would examine the other aspects of the matter, he would see—no doubt much to his disappointment—that output in the steel and car industries last month rose by 16 per cent. and 12 per cent. from their temporarily depressed and distorted January levels. On the basis of the preliminary figures for those two industries, we can expect to see once again an improvement in industrial production in February.
All the measures contained in the Budget are likely to sustain the process of industrial and economic recovery that is now taking place. Most important of all has been the national insurance surcharge reduction, which is worth about £640 million to British industry. The totality of the measures brings relief worth more than £1 billion to British industry. There is an astonishing contrast between the attitude of the Labour Party to the reduction in the national insurance surcharge and the fact that, in April 1977, a Labour Government introduced that tax on jobs at a time when unemployment had been rising for three or four years and when unemployment had doubled since the end of 1974.
This Budget has been welcomed by British industrialists. If Labour Members examine the poll published in the Financial Times on Saturday they will find that the Budget, as a Budget for industry, was regarded as good by 77 per cent. of the industrialists who spoke, that 95 per cent. of industrialists regarded the Budget as good for their company and that 35 per cent. regarded the Budget as setting the scene for an expansion of investment. Sir Raymond Pennock said:
The Budget will help give industry confidence and it will bring down the costs which will improve export performance … and it is bound to lead to some increase in jobs.
When the Government were elected we knew and made it plain that the road to recovery would be hard and that we had to take hard decisions. However, it was right to take them because the prospects for economic recovery are now improving. The fall in oil prices offers new encouragement to British industry. This is first and foremost a Budget for business and industry. It is a Budget for business because it affirms our determination to maintain the fight against inflation. It is a Budget for business because it offers the prospects of lower interest rates in the only way that is sure. It is a Budget for industry and business and for jobs as well. The Opposition must know that we cannot attack unemployment by undermining business. The Budget will help business and will help jobs and I commend it to the House.

Question put:—

The House divided: Ayes 311, Noes 269.

AYES


Division No. 86] [10.00 pm
Aitken, Jonathan


Alexander, Richard
Benyon, Thomas(A'don)


Alison, Rt Hon Michael
Benyon, W. (Buckingham)


Amery, Rt Hon Julian
Best, Keith


Aspinwall.Jack
Bevan, David Gilroy


Atkins, Robert(PrestonN)
Biffen, Rt Hon John


Atkinson, David(B'm'th, E)
Biggs-Davison, SirJohn


Baker, Kenneth(St.M'bone)
Blackburn, John


Baker, Nicholas (N Dorset)
Bonsor, SirNicholas


Banks, Robert
Boscawen, HonRobert


Beaumont-Dark, Anthony
Bottomley, Peter (W'wich W)


Bendall, Vivian
Bowden, Andrew


Bennett, Sir Frederic(T'bay)
Boyson, DrRhodes





Braine, SirBernard
Griffiths, E.(B'yst.Edm'ds)


Bright, Graham
Griffiths, PeterPortsm'thN)


Brinton, Tim
Grist, Ian


Brittan, Rt. Hon. Leon
Grylls, Michael


Brooke, Hon Peter
Gummer, JohnSelwyn


Brotherton, Michael
Hamilton, Hon A.


Brown, Michael(Brigg&amp;Sc'n)
Hamilton, Michael(Salisbury)


Browne, John(Winchester)
Hampson, Dr Keith


Bruce-Gardyne, John
Hannam, John


Bryan, Sir Paul
Haselhurst, Alan


Buck, Antony
Hastings, Stephen


Budgen, Nick
Havers, Rt Hon Sir Michael


Bulmer, Esmond
Hawkins, Paul


Burden, SirFrederick
Hawksley, Warren


Butcher, John
Hayhoe, Barney


Butler, Hon Adam
Heath, Rt Hon Edward


Cadbury, Jocelyn
Heddle, John


Carlisle, John (LutonWest)
Henderson, Barry


Carlisle, Kenneth(Lincoln)
Heseltine, Rt Hon Michael


Carlisle, Rt Hon M. (R'c'n)
Hicks, Robert


Chalker, Mrs. Lynda
Higgins, Rt Hon Terence L.


Channon, Rt. Hon. Paul
Hill, James


Chapman, Sydney
Hogg, HonDouglas(Gr'th'm)


Churchill, W.S.
Holland, Philip(Carlton)


Clark, Hon A. (Plym'th, S'n)
Hooson, Tom


Clark, Sir W.(CroydonS)
Hordern, Peter


CIarke, Kenneth (Rushcliffe)
Howe, Rt Hon Sir Geoffrey


Clegg, Sir Walter
Howell, Rt Hon D.(G'ldf'd)


Cockeram, Eric
Howell, Ralph (NNorfolk)


Colvin, Michael
Hunt, David (Wirral)


Cope, John
Hunt, John(Ravensbourne)


Cormack, Patrick
Hurd, Rt Hon Douglas


Corrie, John
Irving, Charles(Cheltenham)


Costain, SirAlbert
Jenkin, RtHon Patrick


Cranborne, Viscount
Jessel, Toby


Critchley, Julian
JohnsonSmith, Geoffrey


Crouch, David
Jopling, Rt HonMichael


Dean, Paul (NorthSomerset)
Joseph, Rt Hon Sir Keith


Dickens, Geoffrey
Kaberry, SirDonald


Dorrell, Stephen
Kellett-Bowman, MrsElaine


Douglas-Hamilton, LordJ.
Kimball, SirMarcus


Dover, Denshore
King, Rt Hon Tom


Dunn, Robert(Dartford)
Kitson, SirTimothy


Durant, Tony
Knight, MrsJill


Dykes, Hugh
Knox, David


Eden, Rt Hon Sir John
Lamont, Norman


Edwards, Rt Hon N. (P'broke)
Lang, Ian


Eggar, Tim
Langford-Holt, SirJohn


Elliott, SirWilliam
Latham, Michael


Emery, Sir Peter
Lawrence, Ivan


Eyre, Reginald
Lawson, Rt Hon Nigel


Fairbairn, Nicholas
Lee, John


Fairgrieve, SirRussell
LeMarchant, Spencer


Faith, MrsSheila
Lennox-Boyd, HonMark


Farr, John
Lester, Jim (Beeston)


Fell, SirAnthony
Lewis, Kenneth(Rutland)


Fenner, Mrs Peggy
Lloyd, Ian (Havant&amp; W'loo)


Finsberg, Geoffrey
Lloyd, Peter( Fareham)


Fisher, SirNigel
Loveridge, John


Fletcher.A. (Ed'nb'ghN)
Luce, Richard


Fletcher-Cooke, SirCharles
Lyell, Nicholas


Fookes, Miss Janet
McCrindle, Robert


Forman, Nigel
Macfarlane, Neil


Fowler, Rt Hon Norman
MacGregor, John


Fox, Marcus
MacKay, John (Argyll)


Fraser, Rt Hon Sir Hugh
McNair-Wilson, M.(N'bury)


Fraser, Peter (South Angus)
McNair-Wilson, P. (NewF'st)


Fry, Peter
Madel, David


Gardner, Edward (S Fylde)
Major, john


Garel-Jones.Tristan
Marland, Paul


Gilmour, Rt Hon Sir Ian
Marlow, Antony


Glyn, Dr Alan
Marshall, Michael(Arundel)


Goodhart, SirPhilip
Marten, Rt Hon Neil


Goodhew, SirVictor
Mates, Michael


Goodlad, Alastair
Maude, Rt Hon Sir Angus


Gorst, John
Mawby, Ray


Gow, Ian
Mawhinney, DrBrian


Grant, Anthony (HarrowC)
Maxwell-Hyslop, Robin


Gray, Hamish
Mayhew, Patrick


Greenway, Harry
Mellor, David






Meyer, SirAnthony
Shelton, William (Streatham)


Miller, Hal(B'grove)
Shepherd, Colin (Hereford)


Mills, Iain(Meriden)
Shepherd, Richard


Mills, Peter (West Devon)
Shersby, Michael


Miscampbell, Norman
Silvester, Fred


Mitchell, David(Basingstoke)
Sims, Roger


Moate, Roger
Smith, Dudley


Monro, SirHector
Speed, Keith


Montgomery, Fergus
Speller, Tony


Moore, John
Spence, John


Morgan, Geraint
Spicer, Jim (West Dorset)


Morris, M, (N'hampton S)
Spicer, Michael (S Worcs)


Morrison, Hon C, (Devizes)
Sproat, Iain


Morrison, Hon P, (Chester)
Squire, Robin


Mudd, David
Stainton, Keith


Murphy, Christopher
Stanbrook, Ivor


Myles, David
Stanley, John


Neale, Gerrard
Steen, Anthony


Needham, Richard
Stevens, Martin


Nelson, Anthony
Stewart, A, (ERenfrewshire)


Neubert, Michael
Stewart, Ian(Hitchin)


Newton, Tony
Stokes, John


Normanton, Tom
Stradling Thomas, J.


Onslow, Cranley
Tapsell, Peter


Oppenheim, Rt Hon Mrs S.
Taylor, Teddy (S'end E)


Osborn, John
Tebbit, Rt Hon Norman


Page, John (Harrow, West)
Temple-Morris, Peter


Page, Richard (SW Herts)
Thatcher, Rt Hon Mrs M.


Parkinson, Rt Hon Cecil
Thomas, Rt Hon Peter


Parris, Matthew
Thompson, Donald


Patten, Christopher(Bath)
Thorne, Neil(IlfordSouth)


Patten, John (Oxford)
Thornton, Malcolm


Pattie, Geoffrey
Townend John(Bridlington)


Pawsey, James
Townsend, CyrilD, (B'heath)


Percival, SirIan
Trippier, David


Peyton, Rt Hon John
Trotter, Neville


Pink, R, Bonner
vanStraubenzee, SirW.


Pollock, Alexander
Vaughan, Dr Gerard


Porter, Barry
Viggers, Peter


Prentice, Rt Hon Reg
Waddington, David


Price, Sir David (Eastleigh)
Wakeham, John


Prior, Rt Hon James
Waldegrave, HonWilliam


Proctor, K.Harvey
Walker-Smith, Rt Hon Sir D.


Pym, Rt Hon Francis
Wall, SirPatrick


Raison, Rt Hon Timothy
Waller, Gary


Rathbone, Tim
Walters, Dennis


Rees, Peter (Dover and Deal)
Ward, John


Rees-Davies, W. R.
Warren, Kenneth


Renton, Tim
Watson, John


RhodesJames, Robert
Wells, Bowen


RhysWilliams, SirBrandon
Wells, John(Maidstone)


Ridley, HonNicholas
Wheeler, John


Ridsdale, SirJulian
Whitelaw, RtHon William


Rifkind, Malcolm
Wickenden, Keith


Rippon, Rt Hon Geoffrey
Wiggin, Jerry


Roberts, M, (Cardiff NW)
Wllkinson, John


Roberts, Wyn (Conway)
Williams, D.(Montgomery)


Rossi, Hugh
Winterton, Nicholas


Rost, Peter
Wolfson, Mark


Royle, SirAnthony
Young, SirGeorge(Acton)


Sainsbury, HonTimothy
Younger, Rt Hon George


St, John-Stevas, Rt Hon N.



Scott, Nicholas
Tellers for the Ayes:


Shaw, Giles (Pudsey)
Mr, Anthony Berry and


Shaw, Michael (Scarborough)
Mr, Carol Mather




NOES


Abse, Leo
Benn, Rt Hon Tony


Adams, Allen
Bennett, Andrew(St'kp'tN)


Allaun, Frank
Bidwell, Sydney


Alton, David
Booth, Rt HonAlbert


Anderson, Donald
Boothroyd, MissBetty


Archer, Rt Hon Peter
Bradley, Tom


Ashley, Rt Hon Jack
Bray, Dr Jeremy


Ashton, Joe
Brocklebank-Fowler, C.


Atkinson, N.(H'gey, )
Brown, Hugh D. (Provan)


Bagier, GordonA.T.
Brown, R. C. (N'castle W)


Barnett, Guy(Greenwich)
Brown, Ronald W. (H'ckn'yS)


Barnett, Rt Hon Joel (H'wd)
Brown, Ron (E'burgh, Leith)


Beith, A.J.
Buchan, Norman





Callaghan, Rt HonJ.
Hattersley, Rt Hon Roy


Callaghan, Jim (Midd't'n&amp;P)
Haynes, Frank


Campbell, Ian
Healey, Rt Hon Denis


Campbell-Savours, Dale
Heffer, Eric S.


Canavan, Dennis
Hogg, N.(EDunb't'nshire)


Cant, R. B.
Holland, S.(L'b'th, Vauxh'll)


Carmichael, Neil
HomeRobertson, John


Carter-Jones, Lewis
Homewood, William


Cartwright, John
Hooley, Frank


Clark, Dr David (S Shields)
Horam, John


Cocks, Rt Hon M.(B'stol S)
Howell, Rt Hon D.


Cohen, Stanley
Howells, Geraint


Coleman, Donald
Hoyle, Douglas


Concannon, Rt Hon J. D.
Huckfield, Les


Conlan, Bernard
Hughes, Mark(Durham)


Cook, Robin F.
Hughes, Robert (Aberdeen N)


Cowans, Harry
Hughes, Roy (Newport)


Cox, T. (W'dsw'th, Toot'g)
Janner, HonGreville


Craigen, J. M. (G'gow, M'hill)
Jay, Rt Hon Douglas


Crawshaw, Richard
John, Brynmor


Crowther, Stan
Johnson, James (Hull West)


Cryer, Bob
Johnson, Walter (Derby S)


Cunliffe, Lawrence
Jones, Rt Hon Alec (Rh'dda)


Cunningham, G, (IslingtonS)
Jones, Barry (East Flint)


Cunningham, DrJ. (W'h'n)
Jones, Dan(Burnley)


Dalyell, Tam
Kaufman, Rt Hon Gerald


Davidson, Arthur
Kerr, Russell


Davies, RtHonDenzil(L'lli)
Kilfedder, JamesA.


Davies, Ifor (Gower)
Kilroy-Silk, Robert


Davis, Clinton (HackneyC)
Kinnock, Neil


Davis, Terry (B'ham, Stechf'd)
Lambie, David


Deakins, Eric
Lamborn, Harry


Dean, Joseph (Leeds West)
Lamond, James


Dewar, Donald
Leadbitter, Ted


Dixon, Donald
Leighton, Ronald


Dobson, Frank
Lestor, Miss Joan


Dormand, Jack
Lewis, Arthur(N'ham NW)


Douglas, Dick
Lewis, Ron(Carlisle)


Douglas-Mann, Bruce
Litherland, Robert


Dubs, Alfred
Lofthouse, Geoffrey


Duffy, A. E. P.
Lyon, Alexander(York)


Dunn, James A, 
Lyons, Edward (Bradf'dW)


Dunnett, Jack
McCartney, Hugh


Dunwoody, Hon Mrs G.
McDonald, DrOonagh


Eadie, Alex
McElhone, Frank


Eastham, Ken
McGuire, Michael(Ince)


Edwards, R. (W'hampt'n S E)
McKay, Allen (Penistone)


Ellis, R.(NE D'bysh're)
McKelvey, William


Ellis, Tom (Wrexham)
MacKenzie, Rt Hon Gregor


English, Michael
McMahon, Andrew


Ennals, Rt Hon David
McNally, Thomas


Evans, Ioan (Aberdare)
McNamara, Kevin


Evans, John (Newton)
McTaggart, Robert


Ewing, Harry
McWilliam, John


Field, Frank
Magee, Bryan


Fitch, Alan
Marks, Kenneth


Fitt, Gerard
Marshall, D(G'gowS'ton)


Flannery, Martin
Marshall, DrEdmund(Goole)


Fletcher, L. R. (Ilkeston)
Marshall, Jim (LeicesterS)


Fletcher, Ted (Darlington)
Martn, M(G'gowS'burn)


Foot, Rt Hon Michael
Maxton, John


Ford, Ben
Maynard, MissJoan


Forrester, John
Meacher, Michael


Foulkes, George
Mellish, Rt Hon Robert


Fraser, J. (Lamb'th, N'w'd)
Mikardo, Ian


Freeson, Rt Hon Reginald
Millan, Rt Hon Bruce


Freud, Clement
Mitchell, R.C. (Soton Itchen)


Garrett, John (Norwich S)
Morris, Rt Hon A. (W'shawe)


Garrett, W. E. (Wallsend)
Morris, Rt Hon C. (O'shaw)


George, Bruce
Morris, Rt Hon J. (Aberavon)


Gilbert, Rt Hon DrJohn
Morton, George


Golding, John
Mulley, RtHon Frederick


Graham, Ted
Newens, Stanley


Grant, George(Morpeth)
Oakes, Rt Hon Gordon


Grant, John (IslingtonC)
Ogden, Eric


Grimond, Rt HonJ.
O'Halloran, Michael


Hamilton, W.W. (C'tral Fife)
O'Neill, Martin


Hardy, Peter
Orme, Rt Hon Stanley


Harrison, RtHon Walter
Owen, Rt Hon Dr David


Hart, Rt Hon Dame Judith
Paisley, Rev Ian






Palmer, Arthur
Silkin, Rt Hon J. (Deptford)


Park, George
Silkin, Rt Hon S. C. (Dulwich)


Parker, John
Silverman, Julius


Parry, Robert
Skinner, Dennis


Pavitt, Laurie
Smith, Cyril(Rochdale)


Pendry, Tom
Smith, Rt Hon J. (N Lanark)


Pitt, William Henry
Snape, Peter


Powell, Raymond (Ogmore)
Soley, Clive


Prescott, John
Spearing, Nigel


Price, C. (Lewisham W)
Spriggs, Leslie


Race, Reg
Stallard, A. W.


Radice, Giles
Steel, Rt Hon David


Rees, Rt Hon M (Leeds S)
Stewart, Rt Hon D. (W Isles)


Richardson, Jo
Stoddart, David


Roberts, Albert(Normanton)
Stott, Roger


Roberts, Allan (Bootle)
Strang, Gavin


Roberts, Ernest (Hackney N)
Straw, Jack


Roberts, Gwilym (Cannock)
Summerskill, HonDrShirley


Robertson, George
Taylor, Mrs Ann (Bolton W)


Robinson, G. (Coventry NW)
Thomas, Dafydd(Merioneth)


Robinson, P.(Belfast E)
Thomas, Jeffrey(Abertillery)


Rodgers, Rt Hon William
Thomas, Mike (Newcastle E)


Rooker, J. W.
Thomas, DrR. (Carmarthen)


Roper, John
Thorne, Stan (Preston South)


Ross, Ernest (Dundee West)
Tilley, John


Rowlands, Ted
Tinn, James


Ryman, John
Torney, Tom


Sandelson, Neville
Urwin, Rt Hon Tom


Sever, John
Varley, Rt Hon Eric G.


Sheerman, Barry
Wainwright, E.(DearneV)


Sheldon, Rt Hon R.
Wainwright, R.(ColneV)


Shore, Rt Hon Peter
Walker, Rt Hon H.(D'caster)


Short, Mrs Renée
Watkins, David





Weetch, Ken
Wilson, William (C'trySE)


Welsh, Michael
Winnick, David


White, Frank R.
Woodall, Alec


White, J.(G'gowPollok)
Woolmer, Kenneth


Whitehead, Phillip
Wright, Sheila


Whitlock, William
Young, David (BoltonE)


Wigley, Dafydd



Williams, Rt Hon A.(S'sea W)
Tellers for the Noes:


Williams, Rt Hon Mrs (Crosby)
Mr. James Hamilton and


Wilson, Gordon (DundeeE)
Mr. Austin Mitchell.


Wilson, RtHonSirH.(H'ton)

Question accordingly agreed to.

Resolved, 
That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of—

(a) any amendment with respect to value added tax so as to provide—

(i) for zero-rating or exempting any supply;
(ii) for refunding any amount of tax;
(iii) for varying the rate of that tax otherwise than in relation to all supplies and importations; or
(iv) for any relief other than relief applying to goods of whatever description or services of whatever description; or
(b) any amendment relating to the surcharge imposed by the National Insurance Surcharge Act 1976 and applying to some only of the persons by or in respect of whom the surcharge is payable.

Mr. Speaker: I am now required under Standing Orders to put successively without further debate the questions on each of the Ways and Means Motions Nos. 2 to 53, on the four motions on procedure and on the motion on Finance [Money], on all of which the Finance Bill is to be brought in. I shall follow the modern practice and, instead of reading out the motions, simply read out the titles.

2. Spirits

Motion made, and Question, 
That, as from 10th March 1982, the duty of excise on spirits shall be charged at the rate of £14·47 per litre of alcohol in the spirits.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

3. Beer

Motion made, and Question,

That, as from 10th March, 1982, the rates of duty specified in section 36 of the Alcoholic Liquor Duties Act 1979 shall be increased—

(a) from £18·00 for each hectolitre to £20·40 for each hectolitre;
(b) from £0·60 for each additional degree of original gravity exceeding 1030 degrees to £0·68 for each such additional degree.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.— [Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means Motions):—

The House divided: Ayes 314, Noes 235.

Division No. 87]
[10.15 pm


AYES


Aitken, Jonathan
Buck, Antony


Alexander, Richard
Budgen, Nick


Alison, Rt Hon Michael
Bulmer, Esmond


Amery, Rt HonJulian
Burden, SirFrederick


Aspinwall, Jack
Butcher, John


Atkins, Robert(PrestonN)
Butler, HonAdam


Atkinson, David(B'm'th, E)
Cadbury, Jocelyn


Baker, Kenneth(St. M'bone)
Carlisle, John (Luton West)


Baker, Nicholas (N Dorset)
Carlisle, Kenneth (Lincoln)


Banks, Robert
Carlisle, Rt Hon M. (R'c'n )


Beaumont-Dark, Anthony
Chalker, Mrs.Lynda


Bendall, Vivian
Channon, Rt. Hon.Paul


Bennett, SirFrederic(T'bay)
Chapman, Sydney


Benyon, Thomas(A'don)
Churchill, W.S.


Benyon, W.(Buckingham)
Clark, Hon A.(Plym'th, S'n)


Best, Keith
Clark, Sir W, (Croydon S)


Bevan, David Gilroy
Clarke, Kenneth(Rushcliffe)


Biffen, Rt HonJohn
Clegg, SirWalter


Biggs-Davison, SirJohn
Cockeram, Eric


Blackburn, John
Colvin, Michael


Bonsor, SirNicholas
Cope, John


Boscawen, HonRobert
Cormack, Patrick


Bottomley, Peter (W'wichW)
Corrie, John


Bowden, Andrew
Costain, SirAlbert


Boyson, DrRhodes
Cranborne, Viscount


Braine, SirBernard
Critchley, Julian


Bright, Graham
Crouch, David


Brinton, Tim
Cunningham, G.(IslingtonS)


Brittan, Rt.Hon.Leon
Dean, Paul (North Somerset)


Brooke, Hon Peter
Dickens, Geoffrey


Brotherton, Michael
Dorrell, Stephen


Brown, Michael (Brigg&amp;Sc'n)
Douglas-Hamilton, LordJ.


Browne, John(Winchester)
Dover, Denshore


Bruce-Gardyne, John
Dunn, Robert(Dartford)


Bryan, Sir Paul
Durant, Tony




NOES


Abse, Leo
Concannon, Rt Hon J. D.


Adams, Allen
Conlan, Bernard


Allaun, Frank
Cook, Robin F.


Alton, David
Cowans, Harry


Anderson, Donald
Cox, T. (W'dsw'th, Toot'g)


Archer, Rt Hon Peter
Craigen, J. M. (G'gow, M'hill)


Ashley, Rt Hon Jack
Crowther, Stan


Ashton, Joe
Cryer, Bob


Atkinson, N.(H'gey, )
Cunningham, DrJ. (W'h'n)


Bagier, GordonA.T.
Dalyell, Tam


Barnett, Guy(Greenwich)
Davidson, Arthur


Barnett, Rt HonJoel (H'wd)
Davies, Rt Hon Denzil (L'lli)


Benn, Rt Hon Tony
Davies, Ifor (Gower)


Bennett, Andrew(St'kp'tN)
Davis, Clinton (Hackney C)


Bidwell, Sydney
Davis, Terry (B'ham, Stechf'd)


Booth, At Hon Albert
Deakins, Eric


Booth royd, MissBetty
Dean, Joseph (Leeds West)


Bray, Dr Jeremy
Dewar, Donald


Brown, Hugh D. (Provan)
Dixon, Donald


Brown, R. C. (N'castle W)
Dobson, Frank


Brown, Ron (E'burgh, Leith)
Dormand, Jack


Buchan, Norman
Douglas, Dick


Callaghan, Rt Hon J.
Dubs, Alfred


Callaghan, Jim (Midd't'n&amp;P)
Duffy, A. E. P.


Campbell, Ian
Dunnett, Jack


Campbell-Savours, Dale
Dunwoody, Hon Mrs G.


Canavan, Dennis
Eadie, Alex


Cant, R. B.
Eastham, Ken


Carmichael, Neil
Edwards, R. (W'hampt'n S E)


Carter-Jones, Lewis
Ellis, R. (NE D'bysh're)


Clark, Dr David (S Shields)
English, Michael


Cocks, Rt Hon M. (B'stol S)
Ennals, Rt Hon David


Cohen, Stanley
Evans, loan (Aberdare)


Coleman, Donald
Evans, John (Newton)

Dykes, Hugh
Knox, David


Eden, Rt Hon Sir John
Lamont, Norman


Edwards, Rt Hon N. (P'broke)
Lang, Ian


Eggar, Tim
Langford-Holt, SirJohn


Elliott, SirWilliam
Latham, Michael


Emery, Sir Peter
Lawrence, Ivan


Eyre, Reginald
Lawson, Rt Hon Nigel


Fairbairn, Nicholas
Lee, John


Fairgrieve, Sir Russell
LeMarchant, Spencer


Faith, MrsSheila
Lennox-Boyd, HonMark


Farr, John
Lester, Jim(Beeston)


Fell, SirAnthony
Lewis, Kenneth(Rutland)


Fenner, MrsPeggy
Lloyd, Ian (Havant &amp; W'loo)


Finsberg, Geoffrey
Lloyd, Peter(Fareham)


Fisher, SirNigel
Loveridge, John


Fletcher, A.(Ed'nb'ghN)
Luce, Richard


Fletcher-Cooke, SirCharles
Lyell, Nicholas


Fookes, MissJanet
McCrindle, Robert


Forman, Nigel
Macfarlane, Neil


Fowler, Rt Hon Norman
MacGregor, John


Fox, Marcus
MacKay, John(Argyll)


Fraser, Rt Hon Sir Hugh
McNair-Wilson, M.(N'bury)


Fraser, Peter (South Angus)
McNair-Wilson, P.(New F'st)


Fry, Peter
McQuarrie, Albert


Gardner, Edward (S Fylde)
Madel, David


Garel-Jones, Tristan
Major, John


Gilmour, Rt Hon Sir Ian
Marland, Paul


Glyn, Dr Alan
Marlow, Antony


Goodhart, SirPhilip
Marshall, Michael(Arundel)


Goodhew, SirVictor
Marten, Rt Hon Neil


Goodlad, Alastair
Mates, Michael


Gorst, John
Maude, Rt Hon Sir Angus


Gow, Ian
Mawby, Ray


Grant, Anthony (HarrowC)
Mawhinney, DrBrian


Gray, Hamish
Maxwell-Hyslop, Robin


Greenway, Harry
Mayhew, Patrick


Griffiths, E.(B'ySt.Edm'ds)
Mellor, David


Griffiths, Peter Portsm 'thN)
Meyer, SirAnthony


Grist, Ian
Miller, Hal(B'grove)


Grylls, Michael
Mills, Iain(Meriden)


Gummer, JohnSelwyn
Mills, Peter (West Devon)


Hamilton, HonA.
Miscampbell, Norman


Hamilton, Michael(Salisbury)
Mitchell, David(Basingstoke)


Hampson, DrKeith
Moate, Roger


Hannam, John
Monro, SirHector


Haselhurst, Alan
Montgomery, Fergus


Hastings, Stephen
Moore, John


Havers, Rt Hon Sir Michael
Morgan, Geraint


Hawkins, Paul
Morris, M.(N'hamptonS)


Hawksley, Warren
Morrison, Hon C.(Devizes)


Hayhoe, Barney
Morrison, HonP.(Chester)


Heath, Rt Hon Edward
Mudd, David


Heddle, John
Murphy, Christopher


Henderson, Barry
Myles, David


Heseltine, Rt Hon Michael
Neale, Gerrard


Hicks, Robert
Needham, Richard


Higgins, Rt Hon Terence L.
Nelson, Anthony


Hill, James
Neubert, Michael


Hogg, HonDouglas(Gr'th'm)
Newton, Tony


Holland, Philip(Carlton)
Normanton, Tom


Hooson, Tom
Onslow, Cranley


Hordern, Peter
Oppenheim, Rt Hon Mrs S.


Howe, Rt Hon Sir Geoffrey
Osborn, John


Howell, Rt Hon D.(G'ldf'd)
Page, John (Harrow, West)


Howell, Ralph(NNorfolk)
Page, Richard (SW Herts)


Hunt, David(Wirral)
Paisley, Rev Ian


Hunt, John(Ravensbourne)
Parkinson, Rt HonCecil


Hurd, Rt Hon Douglas
Parris, Matthew


Irving, Charles(Cheltenham)
Patten, Christopher(Bath)


Jenkin, Rt Hon Patrick
Patten, John(Oxford)


Jessel, Toby
Pattie, Geoffrey


JohnsonSmith, Geoffrey
Pawsey, James


Jopling, Rt Hon Michael
Percival, Sir Ian


Joseph, Rt Hon Sir Keith
Peyton, Rt Hon John


Kaberry, SirDonald
Pink, R.Bonner


Kellett-Bowman, MrsElaine
Pollock, Alexander


Kimball, SirMarcus
Porter, Barry


King, Rt Hon Tom
Prentice, Rt Hon Reg


Kitson, SirTimothy
Price, Sir David (Eastleigh)


Knight, MrsJill
Prior, Rt Hon James

Proctor, K. Harvey
Stewart, Ian (Hitchin)


Pym, Rt Hon Francis
Stokes, John


Raison, Rt Hon Timothy
StradlingThomas, J.


Rathbone, Tim
Tapsell, Peter


Rees, Peter (Dover and Deal)
Taylor, Teddy (S'end E)


Rees-Davies, W. R.
Tebbit, Rt Hon Norman


Renton, Tim
Temple-Morris, Peter


RhodesJames, Robert
Thomas, Rt Hon Peter


RhysWilliams, SirBrandon
Thompson, Donald


Ridley, Hon Nicholas
Thorne, Neil (IlfordSouth)


Ridsdale, SirJulian
Thornton, Malcolm


Rifkind, Malcolm
Townend, John (Bridlington)


Rippon, At Hon Geoffrey
Townsend, Cyril D, (B'heath)


Roberts, M. (Cardiff NW)
Trippier, David


Roberts, Wyn (Conway)
Trotter, Neville


Robinson, P. (Belfast E)
van Straubenzee, Sir W.


Rossi, Hugh
Vaughan, DrGerard


Rost, Peter
Viggers, Peter


Royle, Si rAnthony
Waddington, David


Sainsbury, HonTimothy
Wakeham, John


St. John-Stevas, Rt Hon N.
Waldegrave, HonWilliam


Scott, Nicholas
Walker, B. (Perth)


Shaw, Giles (Pudsey)
Walker-Smith, Rt Hon Sir D.


Shaw, Michael (Scarborough)
Wall, Si r Patrick


Shelton, William (Streatham)
Waller, Gary


Shepherd, Colin (Hereford)
Walters, Dennis


Shepherd, Richard
Ward, John


Shersby, Michael
Warren, Kenneth


Silvester, Fred
Watson, John


Sims, Roger
Wells, Bowen


Smith, Dudley
Wells, John (Maidstone)


Speed, Keith
Wheeler, John


Speller, Tony
Whitelaw, Rt Hon William


Spence, John
Wickenden, Keith


Spicer, Jim (West Dorset)
Wiggin, Jerry


Spicer, Michael (SWorcs)
Wilkinson, John


Sproat, lain
Williams, D. (Montgomery)


Squire, Robin
Wolfson, Mark


Stainton, Keith
Young, SirGeorge (Acton)


Stanbrook, Ivor
Younger, Rt Hon George


Stanley, John



Steen, Anthony
Tellers for the Ayes:


Stevens, Martin
Mr. Anthony Berry and


Stewart, A.(ERenfrewshire)
Mr. Carol Mather.

Ewing, Harry
Mellish, Rt Hon Robert


Field, Frank
Mikardo, Ian


Fitch, Alan
Millen, Rt Hon Bruce


Fitt, Gerard
Mitchell, Austin (Grimsby)


Flannery, Martin
Morris, Rt Hon A. (W'shawe)


Fletcher, L. R. (Ilkeston)
Morris, Rt Hon C. (O'shaw)


Fletcher, Ted (Darlington)
Morris, Rt Hon J. (Aberavon)


Foot, Rt Hon Michael
Morton, George


Ford, Ben
Mulley, RtHon Frederick


Forrester, John
Newens, Stanley


Foulkes, George
Oakes, Rt Hon Gordon


Fraser, J. (Lamb'th, N'w'd)
O'Halloran, Michael


Freeson, Rt Hon Reginald
O'Neill, Martin


Garrett, John (Norwich S)
Orme, Rt Hon Stanley


Garrett, W. E. (Wallsend)
Palmer, Arthur


George, Bruce
Park, George


Gilbert, Rt Hon DrJohn
Parry, Robert


Golding, John
Pavitt, Laurie


Graham, Ted
Pendry, Tom


Grant, George(Morpeth)
Powell, Raymond(Ogmore)


Hamilton, James(Bothwell)
Prescott, John


Hamilton, W. W. (C'tral Fife)
Price, C. (Lewisham W)


Hardy, Peter
Race, Reg


Harrison, Rt Hon Walter
Radice, Giles


Hart, Rt Hon Dame Judith
Rees, Rt Hon M (Leeds S)


Hattersley, Rt Hon Roy
Richardson, Jo


Healey, Rt Hon Denis
Roberts, Albert(Normanton)


Heffer, Eric S.
Roberts, Allan (Bootle)


Hogg, N. (EDunb't'nshire)
Roberts, Ernest (Hackney N)


Holland, S.(L'b'th, Vauxh'Il)
Roberts, Gwilym (Cannock)


HomeRobertson, John
Robertson, George


Homewood, William
Robinson, G. (Coventry NW)


Howell, Rt Hon D.
Rooker, J. W.


Hoyle, Douglas
Ross, Ernest (Dundee West)


Huckfield, Les
Rowlands, Ted


Hughes, Mark(Durham)
Ryman, John


Hughes, Robert (Aberdeen N)
Sever, John


Hughes, Roy(Newport)
Sheerman, Barry


Janner, HonGreville
Sheldon, Rt Hon R.


Jay, Rt Hon Douglas
Shore, Rt Hon Peter


John, Brynmor
Short, Mrs Renée


Johnson, James (Hull West)
Silkin, Rt HonJ. (Deptford)


Johnson, Walter (DerbyS)
Silkin, Rt Hon S.C. (Dulwich)


Jones, Rt Hon Alec (Rh'dda)
Silverman, Julius


Jones, Barry (East Flint)
Skinner, Dennis


Jones, Dan (Burnley)
Smith, Cyril (Rochdale)


Kaufman, Rt Hon Gerald
Smith, Rt Hon J. (N Lanark)


Kerr, Russell
Snape, Peter


Kilfedder, James A.
Soley, Clive


Kilroy-Silk, Robert
Spearing, Nigel


Kinnock, Neil
Spriggs, Leslie


Lambie, David
Stallard, A. W.


Lamborn, Harry
Stewart, Rt Hon D. (W Isles)


Lamond, James
Stoddart, David


Leadbitter, Ted
Stott, Roger


Leighton, Ronald
Strang, Gavin


Lestor, MissJoan
Straw, Jack


Lewis, Arthur(N'hamNW)
Summerskill, HonDrShirley


Lewis, Ron (Carlisle)
Taylor, Mrs Ann (Bolton W)


Litherland, Robert
Thomas, Dafydd(Merioneth)


Lofthouse, Geoffrey
Thomas, Jeffrey(Abertillery)


McCartney, Hugh
Thomas, DrR.(Carmarthen)


McDonald, DrOonagh
Thorne, Stan (PrestonSouth)


McElhone, Frank
Tilley, John


McGuire, Michael (Ince)
Tinn, James


McKay, Allen(Penistone)
Torney, Tom


McKelvey, William
Urwin, Rt Hon Tom


MacKenzie, Rt Hon Gregor
Varley, Rt Hon Eric G.


McMahon, Andrew
Wainwright, E.(DearneV)


McNamara, Kevin
Walker, At Hon H.(D'caster)


McTaggart, Robert
Watkins, David


McWilliam, John
Weetch, Ken


Marks, Kenneth
Welsh, Michael


Marshall, D(G'gowS'ton)
White, Frank R.


Marshall, DrEdmund (Goole)
White, J. (G'gowPollok)


Marshall, Jim (LeicesterS)
Whitehead, Phillip


Martin, M(G'gowS'burn)
Whitlock, William


Maxton, John
Wigley, Dafydd


Maynard, MissJoan
Williams, Rt Hon A.(S'sea W)


Meacher, Michael
Wilson, Gordon (Dundee E)

Wilson, RtHonSirH.(H'ton)
Young, David (Bolton E)


Wilson, William(C'trySE)



Winnick, David
Tellers for the Noes:


Woodall, Alec
Mr. Laurence Cunliffe and


Woolmer, Kenneth
Mr. Frank Haines.


Wright, Sheila

Question accordingly agreed to.

Description of wine
Rates of duty per hectolitre



£


Wine of a strength—



not exceeding 15 per cent. … … … … … …
106·80


exceeding 15 but not exceeding 18 per cent. …
137·90


exceeding 18 but not exceeding 22 per cent. …
162·30


exceeding 22 per cent. … … … … … … …
162·30 plus



£14 ·47 for every 1 per cent. or part of 1 per cent. in excess of 22 per cent.;



each of the above rates of duty being, in the case of sparkling wine, increased by £23·45 per hectolitre.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

Description of made-wine
Rates of duty per hectolitre



£


Made-wine of a strength—



not exceeding 10 per cent. … … … … … …
73·10


exceeding 10 but not exceeding 15 per cent. …
103·80


exceeding 15 but not exceeding 18 per cent. …
127·80


exceeding 18 per cent. … … … … … … …
127·80 plus



£14·47 for every 1 per cent. or part of 1 per cent. in excess of 18 per cent.;



each of the above rates of duty being, in the case of sparkling made-wine, increased by £10·75 per hectolitre.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

6. CIDER

Motion made, and Question, 
That, as from 10 March 1982, the rate of duty specified in section 62(1) of the Alcoholic Liquor Duties Act 1979 shall be increased from £7·20 per hectolitre to £8·16 per hectolitre.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.— [Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

7. TOBACCO PRODUCTS

Motion made, and Question,

Mr. Speaker: By leave of the House, I shall put together the Question on motions Nos. 4 to 11.

4. WINE

Motion made, and Question,

That, as from 10 March 1982, the rates of duty under section 54 of the Alcoholic Liquor Duties Act 1979 shall be as follows—

5. MADE-WINE

Motion made, and Question,

That, as from 10 March 1982, the rates of duty under section 55 of the Alcoholic Liquor Duties Act 1979 shall be as follows—

That, as from 12th March 1982, for the Table in Schedule 1 to the Tobacco Products Duty Act 1979 there shall be substituted the following Table—

"TABLE


1. Cigarettes
An amount equal to 21 per cent. of the retail price plus £20·68 per thousand cigarettes


2. Cigars
£39·00 per kilogram


3. Hand-rolling tobacco
£33·65 per kilogram


4. Other smoking tobacco and chewing tobacco
£24·95 per kilogram"

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Sir Geoffrey Howe.]

Put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

8. POOL BETTING DUTY

Motion made, and Question, 


That, in respect of bets made at any time by reference to events taking place after 31 March 1982, section 7 of the Betting and Gaming Duties Act 1981 and section 18(1) of the Miscellaneous Transferred Excise Duties Act (Northern Ireland) 1972 (as modified by section 2(2) of the Finance Act 1972) shall have effect with the substitition for any reference to 40 per cent. of a reference to 42½ per cent.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

9. GAMING LICENCE DUTY

Motion made, and Question, 
That, for the purposes of gaming licence duty charged on gaming licences for any period beginning after 31 March 1982, the following Table shall be sustituted for the Table set out in section 14(1) of the Betting and Gaming Duties Act 1981.


TABLE


Part of gross gaming yield



Rate


The first £500, 000 …
…
…
…
… 5 per cent.


The next £1, 750, 000
…
…
…
12½ per cent.


The remainder …
…
…
…
… 25 per cent.


And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Sir Geoffrey Howe.]
put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

10. GAMING MACHINE LICENCE DUTY

Motion made, and Question, 
That new provision may be made with respect to gaming machine licence duty.— [Sir Geoffrey Howe.]
put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

11. BINGO DUTY

Motion made, and Question, 
That new provision may be made with respect to bingo duty.—[Sir Geoffrey Howe.]
put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

12. HYDROCARBON OIL, ETC.

Motion made, and Question, 
That, as from six o'clock in the evening of 9 March 1982, section 6 of the Hydrocarbon Oil Duties Act 1979 (excise duties on hydrocarbon oils) shall have effect with the following modifications:—

(1) In subsection (1) (the rates of duty)—

(a) for "subsection (2)" there shall be substituted "subsections (2) and (3)";
(b) for "£0·1382 a litre" (light oil) there shall be substituted "£0·1554 a litre"; and
(c) for "£0·1191 a litre" (heavy oil) there shall be substituted "£0·1325 a litre".

(2) At the end of the section there shall be added the following subsections—

"(3) In the case of aviation gasoline, the duty of excise charged under subsection (1) above shall be at one half of the rate specified in that subsection in relation to light oil.

(4) In this Act "aviation gasoline" means light oil which—

(a) is specially produced as fuel for aircraft; and
(b) is not normally used in road vehicles; and
(c) is delivered for use solely as fuel for aircraft".

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions):—

The House divided: Ayes 310, Noes 74.

Division No. 88]
[10.28 pm


AYES


Aitken, Jonathan
Elliott, SirWilliam


Alexander, Richard
Emery, Sir Peter


Alison, Rt Hon Michael
Eyre, Reginald


Amery, Rt Hon Julian
Fairbairn, Nicholas


Aspinwall, Jack
Fairgrieve, SirRussell


Atkins, Robert(PrestonN)
Faith, Mrs Sheila


Atkinson, David(B'm'th, E)
Farr, John


Baker, Kenneth(St.M'bone)
Fell, SirAnthony


Baker, Nicholas (N Dorset)
Fenner, Mrs Peggy


Banks, Robert
Finsberg, Geoffrey


Beaumont-Dark, Anthony
Fisher, Sir Nigel


Bendall, Vivian
Fletcher, A. (Ed'nb'gh N)


Bennett, Sir Frederic (T'bay)
Fletcher-Cooke, SirCharles


Benyon, Thomas(A'don)
Fookes, MissJanet


Benyon, W.(Buckingham)
Forman, Nigel


Best, Keith
Fowler, Rt Hon Norman


Bevan, David Gilroy
Fox, Marcus


Biffen, Rt Hon John
Fraser, Rt Hon Sir Hugh


Biggs-Davison, SirJohn
Fraser, Peter (South Angus)


Blackburn, John
Fry, Peter


Bonsor, SirNicholas
Gardner, Edward (S Fylde)


Boscawen, HonRobert
Garel-Jones, Tristan


Bottomley, Peter(W'wich W)
Gilmour, Rt Hon Sir Ian


Bowden, Andrew
Glyn, Dr Alan


Boyson, Dr Rhodes
Goodhart, SirPhilip


Braine, SirBernard
Goodhew, SirVictor


Bright, Graham
Goodlad, Alastair


Brinton, Tim
Gorst, John


Brittan, Rt. Hon. Leon
Gow, Ian


Brooke, Hon Peter
Grant, Anthony (Harrow C)


Brotherton, Michael
Gray, Hamish


Brown, Michael (Brigg&amp;Sc'n)
Greenway, Harry


Browne, John (Winchester)
Griffiths, E.(B'ySt.Edm'ds)


Bruce-Gardyne, John
Griffiths, Peter Portsm'thN)


Bryan, Sir Paul
Grist, Ian


Buck, Antony
Grylls, Michael


Budgen, Nick
Gummer, JohnSelwyn


Bulmer, Esmond
Hamilton, Hon A.


Burden, SirFrederick
Hamilton, Michael (Salisbury)


Butcher, John
Hampson, DrKeith


Butler, HonAdam
Hannam, John


Cadbury, Jocelyn
Haselhurst, Alan


Carlisle, John (Luton West)
Hastings, Stephen


Carlisle, Kenneth (Lincoln)
Havers, Rt Hon Sir Michael


Carlisle, Rt Hon M. (R'c'n )
Hawkins, Paul


Chalker, Mrs. Lynda
Hawksley, Warren


Channon, Rt. Hon. Paul
Hayhoe, Barney


Chapman, Sydney
Heath, Rt Hon Edward


Churchill, W.S.
Heddle, John


Clark, Hon A. (Plym'th, S'n)
Henderson, Barry


Clark, Sir W. (Croydon S)
Heseltine, Rt Hon Michael


Clarke, Kenneth (Rushcliffe)
Hicks, Robert


Clegg, Sir Walter
Higgins, Rt Hon Terence L.


Cockeram, Eric
Hill, James


Colvin, Michael
Hogg, HonDouglas(Gr'th'm)


Cope, John
Holland, Philip(Carlton)


Cormack, Patrick
Hooson, Tom


Corrie, John
Hordern, Peter


Costain, SirAlbert
Howe, Rt Hon Sir Geoffrey


Cranborne, Viscount
Howell, Rt Hon D. (G'ldf'd)


Critchley, Julian
Howell, Ralph (NNorfolk)


Crouch, David
Hunt, David (Wirral)


Cunningham, G. (IslingtonS)
Hunt, John(Ravensbourne)


Dean, Paul (North Somerset)
Hurd, Rt Hon Douglas


Dickens, Geoffrey
Irving, Charles(Cheltenham)


Dorrell, Stephen
Jenkin, Rt Hon Patrick


Douglas-Hamilton, LordJ.
Jessel, Toby


Dover, Denshore
JohnsonSmith, Geoffrey


Dunn, Robert(Dartford)
Jopling, RtHon Michael


Durant, Tony
Joseph, Rt Hon Sir Keith


Dykes, Hugh
Kaberry, SirDonald


Eden, Rt Hon SirJohn
Kellett-Bowman, MrsElaine


Edwards, Rt Hon N. (P'broke)
Kimball, SirMarcus


Eggar, Tim
King, Rt Hon Tom

Question accordingly agreea to.

13. AVIATION GASOLINE (REGULATIONS)

Motion made, and Question, 
That provision may be made extending, in relation to light oil delivered for use as fuel for aircraft, the powers to make regulations under sections 21 and 24 of the Hydrocarbon Oil Duties Act 1979 (protection of the revenue and control of use of duty free and rebated oil).—[Sir Geoffrey Howe.]
put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

14. VEHICLES EXCISE DUTY (ANNUAL RATES)

Motion made, and Question, 
That the Vehicles (Excise) Act 1971 and the Vehicles (Excise) Act (Northern Ireland) 1972 shall have effect with the amendments set out below.
But this Resolution shall not authorise the making of amendments which would result in different provisions being in force in different parts of Great Britain.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

(1) In the said Acts of 1971 and 1972—

(a) for the provisions of Part II of Schedules 1 to 5 (annual rates of duty) there shall be substituted the provisions set out below;
(b) in section 16 (trade licences) for "£35" and "£7" there shall be substituted respectively "£40" and "£8".

(2) Paragraph (1) above has effect in relation to licences taken out after 9th March 1982.

PROVISIONS SUBSTITUTED FOR PART II OF SCHEDULE I TO ACT OF 1971 AND ACT OF 1972


Description of Vehicle
Rate of Duty



£


1. Bicycles and tricycles of which the cylinder capacity of the engine does not exceed 150 cubic centimeters … … … … … … … … … …
8·00


2. Bicycles of which the cylinder capacity of the engine exceeds 150 cubic centimetres but does not exceed 250 cubic centimetres; tricycles (other than those in the foregoing paragraph) and vehicles (other than mowing machines) with more than three wheels, being tricycles and vehicles neither constructed nor adapted for use nor used for the carriage of a driver or passenger … … …
16·00


3. Bicycles and tricycles not in the foregoing paragraphs … … … …
32·00

PROVISIONS SUBSTITUTED FOR PART II OF SCHEDULE 2 TO ACT OF 1971 AND ACT OF 1972


Description of Vehicle
Rate of Duty



£


Hackney carriages … … … … … … … … …
40·00 with an additional 80p for each person above 20 (excluding the driver) for which the vehicle has seating capacity.

PROVISIONS SUBSTITUTED FOR PART II OF SCHEDULE 3 TO ACT OF 1971



Weight unladen of vehicle
Rate of duty


1.
2.
3.
4.
5.


Description of vehicle
Exceeding
Not exceeding
Initial
Additional for each ton or part of a ton in excess of the weight in column 2





£
£


1. Agricultural machines; digging machines; mobile cranes; works trucks; mowing machines; fisher-men's tractors
—
—
13·50
—


2. Haulage vehicles, being show-men's vehicles
—
7¼ tons
130·00
—


7¼ tons
8 tons
156·00
—


8 tons
10 tons
183·00
—


10 tons
—
183·00
28·00


3. Haulage vehicles, not being showmen's vehicles
—
2 tons
155·00
—


2 tons
4 tons
278·00
—


4 tons
6 tons
402·00
—


6 tons
7¼ tons
525·00
—


7¼ tons
8 tons
642·00
—


8 tons
10 tons
642·00
109·00


10 tons
—
860·00
123·00

PROVISIONS SUBSTITUTED FOR PART II OF SCHEDULE 3 TO ACT OF 1972



Weight unladen of vehicle
Rate of duty


1.
2.
3.
4.
5.


Description of vehicle
Exceeding
Notexceeding
Initial
Additional for each ton or part of a ton in excess of the weight in column 2





£
£


1. Agricultural machines; diggingmachines; mobile cranes; workstrucks; mowing machines; fisher-men's tractors
—
—
13·50
—


2. Haulage vehicles, being show-men's vehicles
—
7¼ tons
130·00
—


7¼ tons
8 tons
156·00
—


8 tons
10 tons
183·00
—


10 tons
—
183·00
28·00


3. Haulage vehicles, not being showmen's vehicles
—
2 tons
139·00
—


2 tons
4 tons
248·00
—


4 tons
6 tons
355·00
—


6 tons
7¼ tons
464·00
—


7¼ tons
8 tons
572·00
—


8 tons
—
572·00
123·00

PROVISIONS SUBSTITUTED FOR PART II OF SCHEDULE 4 TO ACT OF 1971



TABLES SHOWING ANNUAL RATES OF DUTY ON GOODS VEHICLES


TABLE A


GENERAL RATES OF DUTY



Weight unladen of vehicle
Rate of duty


1.
2.
3.
4.
5.


Description of vehicles
Exceeding
Not exceeding
Initial.
Additional for each ¼ ton or part of a ¼ ton in excess of the weight in column 2





£
£


1. Farmers' goods vehicles …
—
12 cwt
46·00
—


12 cwt
16 cwt
50·00
—


16 cwt
1 ton
54·00
—


1 ton
3 tons
53·00
7·00


3 tons
4 tons
106·00
5·00


4 tons
7 tons
126·00
4·00


7 tons
9 tons
176·00
2·00


9 tons
—
233·00
6·00


2. Showmen's goods vehicles—…
—
12 cwt
46·00
—


12 cwt
16 cwt
50·00
—


16 cwt
1 ton
54·00
—


1 ton
3 tons
53·00
7·00


3 tons
4 tons
106·00
5·00


4 tons
6 tons
126·00
4·00


6 tons
9 tons
156·00
7·00


9 tons
—
278·00
10·00


3. Tower wagons … … …
—
12 cwt
62·00
—


12 cwt
16 cwt
69·00
—


16 cwt
1 ton
78·00
—


1 ton
4 tons
77·00
8·00


4 tons
6 tons
171·00
9·00


6 tons
9 tons
242·00
8·00


9 tons
—
394·00
15·00


4. Goods vehicles not included in any of the foregoing provisions of this Part of this Schedule
—
1 ton
80·00
—


1 ton
1¼ tons
90·00
—


1¼ tons
1½ tons
100·00
—


1½ tons
3 tons
130·00
22·00


3 tons
4 tons
264·00
23·00


4 tons
9 tons
340·00
40·00


9 tons
10 tons
1, 351·00
48·00


10 tons
—
1, 537·00
57·00

TABLE B


RATES OF DUTY ON GOODS VEHICLES USED FOR DRAWING TRAILERS



Weight unladen of vehicle



1. Description of vehicle
2. Exceeding
3. Not exceeding
4.Rate of duty





£


1. Showmen's goods vehicles
—
—
41·00


2. Other goods vehicles … …
—
1½ tons
41·00


1½ tons
3 tons
55·00


3 tons
4 tons
92·00


4 tons
6 tons
139·00


6 tons
9 tons
173·00


9 tons
—
210·00

PROVISIONS SUBSTITUTED FOR PART II OF SCHEDULE 4 TO ACT OF I972


TABLES SHOWING ANNUAL RATES OF DUTY ON GOODS VEHICLES


TABLE A


GENERAL RATES OF DUTY



Weight unladen of vehicle
Rate of duty


1.
2.
3.
4.
5.


Description of vehicle
Exceeding
Not exceeding
Initial
Additional for each ¼ ton or part of a ¼ ton inexcess of the weight in column 2





£
£


1. Farmers' goods vehicles
—
12 cwt
46·00
—


12 cwt
16 cwt
50·00
—


16 cwt
1 ton
54·00
—


1 ton
3 tons
53·00
7·00


3 tons
6 tons
111·00
2·00


6 tons
8 tons
143·00
1·00


8 tons
9 tons
157·00
2·00


9 tons
—
201·00
4·00


2. Showmen's goods vehicles; tower wagons
—
12 cwt
60·00
—


12 cwt
16 cwt
62·00
—


16 cwt
1 ton
70·00
—


1 ton
2 tons
73·00
3·00


2 tons
3 tons
84·00
4·00


3 tons
5 tons
97·00
6·00


5 tons
6 tons
144·00
5·00


6 tons
9 tons
158·00
7·00


9 tons
—
278·00
10·00


3. Goods vehicles not included in any of the foregoing provisions of this Part
—
1 ton
80·00
—


1 ton
1¼ tons
90·00
—


1¼ tons
1½ tons
100·00
—


1½ tons
3 tons
116·00
16·00


3 tons
4 tons
209·00
25·00


4 tons
6 tons
310·00
32·00


6 tons
9 tons
569·00
37·00


9 tons
—
1, 218·00
50·00

TABLE B


RATES OF DUTY ON GOODS VEHICLES USED FOR DRAWING TRAILERS


1. Description of vehicle
Weight unladen of vehicle
4. Rate of duty


2. Exceeding
3. Not exceeding


1. Showmen's goods vehicles
—
—
£ 41·00


2. Other goods vehicles … …
—
1½ tons
41·00


1½ tons
3 tons
55·00


3 tons
4 tons
92·00


4 tons
6 tons
139·00


6 tons
9 tons
173·00


9 tons
—
21·000

PROVISIONS SUBSTITUTED FOR PART II OF SCHEDULE 5 TO ACT OF 197 I


Description of vehicle
Rate of duty



£


1. Vehicles not for the first time exceeding 7 horse-power, if registered under the Roads Act 1920 for the time before 1st January 1947 … … … … … … … …
57·00


2. Vehicles not included above … … … … … … … … … …
80·00

PROVISIONS SUBSTITUTED FOR PART n OF SCHEDULE 5 TO ACT OF 1972


Description of vehicle
Rate of duty



£


1. Vehicles first registered under the Roads Act 1920 before 1st January 1947, or which, if its first registration for taxation purposes had been effected in Northern Ireland would have been so first registered as aforesaid under the Act as in force in Northern Ireland:



(i) not exceeding 6 horse-power … … … … … … … … …
48·00


(ii) exceeding 6 horse-power but not exceeding 9 horse-power—for each unit or part of a unit of horse-power… … … … … … …
8·00


2. Other vehicles … … … … … … … … … … … … … …
8000


—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions):—

The House divided: Ayes 309, Noes 241.

Division No. 88]
[10.28 pm


AYES


Aitken, Jonathan
Elliott, SirWilliam


Alexander, Richard
Emery, Sir Peter


Alison, Rt Hon Michael
Eyre, Reginald


Amery, Rt Hon Julian
Fairbairn, Nicholas


Aspinwall, Jack
Fairgrieve, SirRussell


Atkins, Robert(PrestonN)
Faith, Mrs Sheila


Atkinson, David(B'm'th, E)
Farr, John


Baker, Kenneth(St.M'bone)
Fell, SirAnthony


Baker, Nicholas (N Dorset)
Fenner, Mrs Peggy


Banks, Robert
Finsberg, Geoffrey


Beaumont-Dark, Anthony
Fisher, Sir Nigel


Bendall, Vivian
Fletcher, A. (Ed'nb'gh N)


Bennett, Sir Frederic (T'bay)
Fletcher-Cooke, SirCharles


Benyon, Thomas(A'don)
Fookes, MissJanet


Benyon, W.(Buckingham)
Forman, Nigel


Best, Keith
Fowler, Rt Hon Norman


Bevan, David Gilroy
Fox, Marcus


Biffen, Rt Hon John
Fraser, Rt Hon Sir Hugh


Biggs-Davison, SirJohn
Fraser, Peter (South Angus)


Blackburn, John
Fry, Peter


Bonsor, SirNicholas
Gardner, Edward (S Fylde)


Boscawen, HonRobert
Garel-Jones, Tristan


Bottomley, Peter(W'wich W)
Gilmour, Rt Hon Sir Ian


Bowden, Andrew
Glyn, Dr Alan


Boyson, Dr Rhodes
Goodhart, SirPhilip


Braine, SirBernard
Goodhew, SirVictor


Bright, Graham
Goodlad, Alastair


Brinton, Tim
Gorst, John


Brittan, Rt. Hon. Leon
Gow, Ian


Brooke, Hon Peter
Grant, Anthony (Harrow C)


Brotherton, Michael
Gray, Hamish


Brown, Michael (Brigg&amp;Sc'n)
Greenway, Harry


Browne, John (Winchester)
Griffiths, E.(B'ySt.Edm'ds)


Bruce-Gardyne, John
Griffiths, Peter Portsm'thN)


Bryan, Sir Paul
Grist, Ian


Buck, Antony
Grylls, Michael


Budgen, Nick
Gummer, JohnSelwyn


Bulmer, Esmond
Hamilton, Hon A.


Burden, SirFrederick
Hamilton, Michael (Salisbury)


Butcher, John
Hampson, DrKeith


Butler, HonAdam
Hannam, John


Cadbury, Jocelyn
Haselhurst, Alan


Carlisle, John (Luton West)
Hastings, Stephen


Carlisle, Kenneth (Lincoln)
Havers, Rt Hon Sir Michael


Carlisle, Rt Hon M. (R'c'n )
Hawkins, Paul


Chalker, Mrs. Lynda
Hawksley, Warren


Channon, Rt. Hon. Paul
Hayhoe, Barney


Chapman, Sydney
Heath, Rt Hon Edward


Churchill, W.S.
Heddle, John


Clark, Hon A. (Plym'th, S'n)
Henderson, Barry


Clark, Sir W. (Croydon S)
Heseltine, Rt Hon Michael


Clarke, Kenneth (Rushcliffe)
Hicks, Robert


Clegg, Sir Walter
Higgins, Rt Hon Terence L.


Cockeram, Eric
Hill, James


Colvin, Michael
Hogg, HonDouglas(Gr'th'm)


Cope, John
Holland, Philip(Carlton)


Cormack, Patrick
Hooson, Tom


Corrie, John
Hordern, Peter


Costain, SirAlbert
Howe, Rt Hon Sir Geoffrey


Cranborne, Viscount
Howell, Rt Hon D. (G'ldf'd)


Critchley, Julian
Howell, Ralph (NNorfolk)


Crouch, David
Hunt, David (Wirral)


Cunningham, G. (IslingtonS)
Hunt, John(Ravensbourne)


Dean, Paul (North Somerset)
Hurd, Rt Hon Douglas


Dickens, Geoffrey
Irving, Charles(Cheltenham)


Dorrell, Stephen
Jenkin, Rt Hon Patrick


Douglas-Hamilton, LordJ.
Jessel, Toby


Dover, Denshore
JohnsonSmith, Geoffrey


Dunn, Robert(Dartford)
Jopling, RtHon Michael


Durant, Tony
Joseph, Rt Hon Sir Keith


Dykes, Hugh
Kaberry, SirDonald


Eden, Rt Hon SirJohn
Kellett-Bowman, MrsElaine


Edwards, Rt Hon N. (P'broke)
Kimball, SirMarcus


Eggar, Tim
King, Rt Hon Tom




Kitson, SirTimothy
Proctor, K. Harvey


Knight, MrsJill
Pym, Rt Hon Francis


Knox, David
Raison, Rt Hon Timothy


Lamont, Norman
Rathbone, Tim


Lang, Ian
Rees, Peter (Dover and Deal)


Langford-Holt, SirJohn
Rees-Davies, W. R.


Latham, Michael
Renton, Tim


Lawrence, Ivan
RhodesJames, Robert


Lawson, Rt Hon Nigel
RhysWilliams, SirBrandon


Lee, John
Ridley, HonNicholas


LeMarchant, Spencer
Ridsdale, SirJulian


Lennox-Boyd, HonMark
Rifkind, Malcolm


Lester, Jim (Beeston)
Rippon, At Hon Geoffrey


Lewis, Kenneth (Rutland)
Roberts, M. (Cardiff NW)


Lloyd, Ian (Havant &amp; W'loo)
Roberts, Wyn (Conway)


Lloyd, Peter (Fareham)
Rossi, Hugh


Loveridge, John
Rost, Peter


Luce, Richard
Royle, SirAnthony


Lyell, Nicholas
Sainsbury, HonTimothy


McCrindle, Robert
St. John-Stevas, Rt Hon N.


Macfarlane, Neil
Scott, Nicholas


MacGregor, John
Shaw, Giles (Pudsey)


MacKay, John (Argyll)
Shaw, Michael (Scarborough)


McNair-Wilson, M. (N'bury)
Shelton, William (Streatham)


McNair-Wilson, P. (New F'st)
Shepherd, Colin (Hereford)


Madel, David
Shepherd, Richard


Major, John
Shersby, Michael


Marland, Paul
Silvester, Fred


Marlow, Antony
Sims, Roger


Marshall, Michael (Arundel)
Smith, Dudley


Marten, Rt Hon Neil
Speed, Keith


Mates, Michael
Speller, Tony


Maude, Rt Hon Sir Angus
Spence, John


Mawby, Ray
Spicer, Jim (West Dorset)


Mawhinney, DrBrian
Spicer, Michael (S Worcs)


Maxwell-Hyslop, Robin
Sproat, Iain


Mayhew, Patrick
Squire, Robin


Mellor, David
Stainton, Keith


Meyer, SirAnthony
Stanbrook, Ivor


Miller, Hal (B'grove)
Stanley, John


Mills, Iain (Meriden)
Steen, Anthony


Mills, Peter (West Devon)
Stevens, Martin


Miscampbell, Norman
Stewart, A. (ERenfrewshire)


Mitchell, David (Basingstoke)
Stewart, Ian (Hitchin)


Moate, Roger
Stokes, John


Monro, SirHector
StradlingThomas, J.


Montgomery, Fergus
Tapsell, Peter


Moore, John
Taylor, Teddy (S'end E)


Morgan, Geraint
Tebbit, Rt Hon Norman


Morris, M. (N'hamptonS)
Temple-Morris, Peter


Morrison, Hon C. (Devizes)
Thomas, Rt Hon Peter


Morrison, Hon P. (Chester)
Thompson, Donald


Mudd, David
Thorne, Neil (IlfordSouth)


Murphy, Christopher
Thornton, Malcolm


Neale, Gerrard
Townend, John (Bridlington)


Needham, Richard
Townsend, Cyril D, (B'heath)


Nelson, Anthony
Trippier, David


Neubert, Michael
Trotter, Neville


Newton, Tony
van Straubenzee, Sir W.


Normanton, Tom
Vaughan, DrGerard


Onslow, Cranley
Viggers, Peter


Oppenheim, Rt Hon Mrs S.
Waddington, David


Osborn, John
Wakeham, John


Page, John (Harrow, West)
Waldegrave, HonWilliam


Page, Richard (SW Herts)
Walker-Smith, At Hon Sir D.


Parkinson, At Hon Cecil
Wall, SirPatrick


Parris, Matthew
Waller, Gary


Patten, Christopher (Bath)
Walters, Dennis


Patten, John (Oxford)
Ward, John


Pattie, Geoffrey
Warren, Kenneth


Pawsey, James
Watson, John


Percival, Sir Ian
Wells, Bowen


Peyton, Rt Hon John
Wells, John (Maidstone)


Pink, R. Bonner
Wheeler, John


Pollock, Alexander
Whitelaw, RtHon William


Porter, Barry
Wickenden, Keith


Prentice, Rt Hon Reg
Wiggin, Jerry


Price, Sir David (Eastleigh )
Wilkinson, John


Prior, Rt Hon James
Will iams, D. (Montgomery)





Winterton, Nicholas



Wolfson, Mark
Tellers for the Ayes:


Young, SirGeorge (Acton)
Mr. Anthony Berry and


Younger, Rt Hon George
Mr. Carol Mather.




NOES


Alton, David
Marshall, DrEdmund (Goole)


Ashton, Joe
Marshall, Jim (LeicesterS)


Beith, A. J.
Maxton, John


Bennett, Andrew(St'kp'tN)
Mitchell, R. C. (Sotonltchen)


Canavan, Dennis
Newens, Stanley


Carmichael, Neil
O'Halloran, Michael


Carter-Jones, Lewis
Paisley, Rev Ian


Cohen, Stanley
Park, George


Cowans, Harry
Parry, Robert


Craigen, J. M. (G'gow, M'hill)
Pendry, Tom


Cryer, Bob
Pitt, William Henry


Dalyell, Tam
Race, Reg


Ellis, R. (NE D'bysh 're)
Richardson, Jo


English, Michael
Roberts, Allan (Bootle)


Field, Frank
Roberts, Gwilym (Cannock)


Fitt, Gerard
Robinson, P. (Belfast E)


Foulkes, George
Ross, Ernest (Dundee West)


Golding, John
Skinner, Dennis


Hamilton, W. W. (C'tral Fife)
Smith, Cyril (Rochdale)


Hart, Rt Hon Dame Judith
Spriggs, Leslie


Holland, S. (L'b'th, Vauxh'll)
Stallard, A. W.


HomeRobertson, John
Steel, Rt Hon David


Homewood, William
Stewart, Rt Hon D. (W Isles)


Hoyle, Douglas
Stoddart, David


Hughes, Roy (Newport)
Stott, Roger


Janner, HonGreville
Thomas, Dafydd (Merioneth)


Kilfedder, James A.
Thorne, Stan (PrestonSouth )


Lambie, David
Torney, Tom


Lamborn, Harry
Urwin, Rt Hon Tom


Lamond, James
Walker, B. (Perth)


Leadbitter, Ted
Watkins, David


Lewis, Arthur (N'ham NW)
Weetch, Ken


Lewis, Ron (Carlisle)
Winnick, David


Litherland, Robert
Woodall, Alec


Lofthouse, Geoffrey
Young, David (Bolton E)


McKay, Allen (Penistone)



McMahon, Andrew
Tellers for the Noes:


McQuarrie, Albert
Mr. Gordon Wilson and


Marshall, D(G'gowS'ton)
Mr. Dafydd Wigley.

Division No. 89]
[10.40 pm


AYES


Aitken, Jonathan
Biffen, Rt Hon John


Alexander, Richard
Biggs-Davison, SirJohn


Alison, RtHon Michael
Blackburn, John


Aspinwall, Jack
Bonsor, SirNicholas


Atkins, Robert(PrestonN)
Boscawen, Hon Robert


Atkinson, David (B'm'th, E)
Bottomley, Peter (W'wich W)


Baker, Kenneth(St.M'bone)
Bowden, Andrew


Baker, Nicholas (N Dorset)
Boyson, DrRhodes


Banks, Robert
Braine, SirBemard


Beaumont-Dark, Anthony
Bright, Graham


Bendall, Vivian
Brinton, Tim


Bennett, SirFrederic (T'bay)
Brittan, Rt. Hon. Leon


Benyon, Thomas (A'don)
Brooke, Hon Peter


Benyon, W.(Buckingham)
Brotherton, Michael


Best, Keith
Brown, Hugh D. (Provan)


Bevan, DavidGilroy
Browne, John(Winchester)





Bruce-Gardyne, John
Cope, John


Bryan, Sir Paul
Cormack, Patrick


Buck, Antony
Corrie, John


Budgen, Nick
Costain, SirAlbert


Bulmer, Esmond
Cranborne, Viscount


Burden, SirFrederick
Critchley, Julian


Butcher, John
Crouch, David


Butler, HonAdam
Dean, Paul(NorthSomerset)


Cadbury, Jocelyn
Dickens, Geoffrey


Carlisle, John(Luton West)
Dorrell, Stephen


Carlisle, Kenneth(Lincoln)
Douglas-Hamilton, LordJ.


Carlisle, Rt Hon M. (R'c'n)
Dover, Denshore


Chalker, Mrs. Lynda
Dunn, Robert(Dartford)


Channon, Rt. Hon. Paul
Durant, Tony


Chapman, Sydney
Dykes, Hugh


Churchill, W.S.
Eden, Rt Hon Sir John


Clark, Hon A. (Plym'th, S'n)
Edwards, Rt Hon N.(P'broke)


Clark, SirW.(CroydonS)
Eggar, Tim


Clarke, Kenneth(Rushcliffe)
Elliott, SirWilliam


Clegg, SirWalter
Emery, Sir Peter


Cockeram, Eric
Eyre, Reginald


Colvin, Michael
Fairbairn, Nicholas






Fairgrieve, SirRussell
Len nox-Boyd, Hon Mark


Faith, Mrs Sheila
Lester, Jim (Beeston)


Farr, John
Lewis, Kenneth(Rutland)


Fell, Sir Anthony
Lloyd, Ian (Havant &amp; W'loo)


Fenner, Mrs Peggy
Lloyd, Peter (Fareham)


Finsberg, Geoffrey
Loveridge, John


Fisher, SirNigel
Luce, Richard


Fletcher, A. (Ed'nb'ghN)
Lyell, Nicholas


Fletcher-Cooke, SirCharles
McCrindle, Robert


Fookes, Miss Janet
Macfarlane, Neil


Forman, Nigel
MacGregor, John


Fowler, Rt Hon Norman
MacKay, John (Argyll)


Fox, Marcus
McNair-Wilson, M.(N'bury)


Fraser, Rt Hon Sir Hugh
McNair-Wilson, P. (New F'st)


Fraser, Peter (South Angus)
McQuarrie, Albert


Fry, Peter
Madel, David


Gardner, Edward (S Fylde)
Major, John


Garel-Jones, Tristan
Marland, Paul


Gilmour, Rt Hon Sir Ian
Marlow, Antony


Glyn, DrAlan
Marshall, Michael (Arundel)


Goodhart, SirPhilip
Marten, Rt Hon Neil


Goodhew, SirVictor
Mates, Michael


Goodlad, Alastair
Maude, Rt Hon Sir Angus


Gorst, John
Mawby, Ray


Gow, Ian
Mawhinney, DrBrian


Grant, Anthony (HarrowC)
Maxwell-Hyslop, Robin


Gray, Hamish
Mayhew, Patrick


Greenway, Harry
Mellor, David


Griffiths, E.(B'ySt. Edm'ds)
Meyer, SirAnthony


Griffiths, Peter Portsm'thN)
Miller, Hal(B'grove)


Grist, Ian
Mills, Iain(Meriden)


Grylls, Michael
Mills, Peter (WestDevon)


Hamilton, Hon A.
Miscampbell, DNorman


Hamilton, Michael (Salisbury)
Mitchell, David (Basingstoke)


Hampson, DrKeith
Moate, Roger


Hannam, John
Monro, SirHector


Haselhurst.Alan
Montgomery, Fergus


Hastings, Stephen
Moore, John


Havers, Rt Hon Sir Michael
Morgan, Geraint


Hawkins, Paul
Morris, M. (N'hamptonS)


Hawksley, Warren
Morrison, HonC. (Devizes)


Hayhoe, Barney
Morrison, Hon P. (Chester)


Heath, Rt Hon Edward
Mudd, David


Heddle, John
Murphy, Christopher


Henderson, Barry
Myles, David


Heseltine, Rt Hon Michael
Neale, Gerrard


Hicks, Robert
Needham, Richard


Higgins, Rt Hon Terence L.
Nelson, Anthony


Hill, James
Neubert, Michael


Hogg, HonDouglas(Gr'th'm)
Newton, Tony


Holland, Philip(Carlton)
Normanton, Tom


Hooson, Tom
Onslow, Cranley


Hordern, Peter
Oppenheim, Rt Hon Mrs S.


Howe, Rt Hon Sir Geoffrey
Osborn, John


Howell, RtHonD. (G'ldf'd)
Page, John (Harrow, West)


Howell, Ralph (NNorfolk)
Page, Richard (SW Herts)


Hunt, David (Wirral)
Parkinson, Rt Hon Cecil


Hunt.John (Ravensboume)
Parris, Matthew


Hurd, Rt Hon Douglas
Patten, ChristopherfBafty


Irving, Charles (Cheltenham)
Patten, John (Oxford)


Jenkin, Rt Hon Patrick
Pattie, Geoffrey


Jessel, Toby
Pawsey, James


JohnsonSmith, Geoffrey
Percival, Sir lan


Jopling, RtHonMichael
Peyton, Rt Hon John


Joseph, Rt Hon Sir Keith
Pink, R. Bonner


Kaberry, SirDonald
Pollock, Alexander


Kellett-Bowman, MrsElaine
Porter, Barry


Kimball, SirMarcus
Prentice, Rt Hon Reg


King, Rt Hon Tom
Price, SirDavid (Eastleigh)


Kitson, SirTimothy
Prior, Rt Hon James


Knight, MrsJill
Proctor, K. Harvey


Knox, David
Pym, Rt Hon Francis


Lamont, Norman
Raison, Rt HonTimothy


Lang, Ian
Rathbone, Tim


Langford-Holt.SirJohn
Rees, Peter (Dover and Deal)


Latham, Michael
Rees-Davies, W. R.


Lawrence, Ivan
Renton, Tim


Lawson, Rt Hon Nigel
Rhodes James, Robert


Lee, John
RhysWilliams, SirBrandon


LeMarchant, Spencer
Ridley, HonNicholas





Ridsdale, SirJulian
Thomas, Rt Hon Peter


Rifkind, Malcolm
Thompson, Donald


Rippon, RtHon Geoffrey
Thorne, Neil(IlfordSouft)


Roberts, M. (Cardiff NW)
Thornton, Malcolm


Roberts, Wyn (Conway)
Townend, John (Bridlington)


Rossi, Hugh
Townsend, Cyril D, (B'heath)


Rost, Peter
Trippier, David


Royle, SirAnthony
Trotter, Neville


Sainsbury, HonTimothy
van Straubenzee, Sir W.


St. John-Stevas, Rt Hon N.
Vaughan, DrGerard


Scott, Nicholas
Viggers, Peter


Shaw, Giles (Pudsey)
Waddington, David


Shaw, Michael (Scarborough)
Wakeham, John


Shelton, William(Streatham)
Waldegrave, HonWilliam


Shepherd, Colin(Hereford)
Walker, B. (Perth)


Shepherd, Richard
Walker-Smith, Rt Hon Sir D.


Shersby, Michael
Wall, Sir Patrick


Silvester, Fred
Waller, Gary


Sims, Roger
Walters, Dennis


Smith, Dudley
Ward, John


Speed, Keith
Warren, Kenneth


Speller, Tony
Watson, John


Spence, John
Wells, Bowen


Spicer, Jim (WestDorset)
Wells, John(Maidstone)


Spicer, Michael (SWorcs)
Wheeler, John


Sproat, Iain
Whitelaw, RtHon William


Squire, Robin
Wickenden, Keith


Stanbrook, Ivor
Wiggin, Jerry


Stanley, John
Wilkinson, John


Steen, Anthony
Williams, D.(Montgomery)


Stevens, Martin
Winterton, Nicholas


Stewart, A.(ERenfrewshire)
Wolfson, Mark


Stewart, Ian (Hitchin)
Young, SirGeorge (Acton)


Stokes, John
Younger, Rt Hon George


StradlingThomas.J.



Tapsell, Peter
Tellers for the Ayes:


Taylor, Teddy (S'end E)
Mr. Anthony Berry and


Tebbit, RtHon Norman
Mr. Carol Mather.


Temple-Morris, Peter





NOES


Abse, Leo
Crowther, Stan


Adams, Allen
Cryer, Bob


Allaun, Frank
Cunliffe, Lawrence


Alton, David
Cunningham, G.(IslingtonS)


Anderson, Donald
Cunningham, Dr J.(W'h'n)


Archer, Rt Hon Peter
Dalyell, Tam


Ashley, Rt Hon Jack
Davidson, Arthur


Ashton, Joe
Davies, Rt Hon Denzil (L'lli)


Atkinson, H.(H'gey, )
Davies, Ifor (Gower)


Bag ier, Gordon AT.
Davis, Clinton (Hackney C)


Barnett, Guy (Greenwich)
Davis, Terry (B'ham, Stechf'd)


Barnett, Rt Hon Joel (H'wd)
Deakins, Eric


Benn, Rt Hon Tony
Dean, Joseph (Leeds West)


Bennett, Andrew(St'kp'tN)
Dewar, Donald


Bidwell, Sydney
Dixon, Donald


Booth, RtHonAlbert
Dobson, Frank


Bray, Dr Jeremy
Dormand, Jack


Brown, Hugh D. (Provan)
Douglas, Dick


Brown, R. C. (N'castle W)
Dubs, Alfred


Brown, Ron(E'burgh, Leith)
Duffy, A. E. P.


Buchan, Norman
Dunnett, Jack


Callaghan, Rt Hon J.
Du nwoody, Hon Mrs G.


Callaghan, Jim (Midd't'n&amp;P)
Eadie, Alex


Campbell, Ian
Eastham, Ken


Campbell-Savours, Dale
Edwards, R. (W'hampt'nSE)


Canavan, Dennis
Ellis, H.(NED'bysh're)


Cant, R. B.
English, Michael


Carmichael, Neil
Ennals, Rt Hon David


Carter-Jones, Lewis
Evans, loan (Aberdare)


Clark, Dr David (S Shields)
Evans, John (Newton)


Cocks, Rt Hon M. (B'stol S)
Ewing, Harry


Cohen, Stanley
Field, Frank


Coleman, Donald
Fitch, Alan


Concannon, Rt Hon J. D.
Fitt, Gerard


Conlan, Bernard
Flannery, Martin


Cook, Robin F.
Fletcher, L. R. (Ilkeston)


Cowans, Harry
Fletcher, Ted(Darlington)


Cox, T. (W'dsw'th, Too'g)
Foot, Rt Hon Michael


Craigen, J. M. (G'gow, M'hill)
Ford, Ben






Forrester, John
Mulley, RtHonFrederick


Foulkes, George
Newens, Stanley


Fraser, J. (Lamb'th, N'w'd)
Oakes, Rt Hon Gordon


Freeson, Rt Hon Reginald
O'Halloran, Michael


Garrett, John (NorwichS)
O'Neill, Martin


Garrett, W. E. (Wallsend)
Orme, Rt Hon Stanley


George, Bruce
Paisley, Rev Ian


Gilbert, Rt Hon Dr John
Palmer, Arthur


Golding, John
Park, George


Graham, Ted
Parry, Robert


Grant, George(Morpeth)
Pavitt, Laurie


Hamilton, James(Bothwell)
Pendry, Tom


Hamilton, W. W. (C'tral Fife)
Powell, Rt Hon J.E. (S Down)


Hardy, Peter
Powell, Raymond (Ogmore)


Harrison, RtHonWalter
Prescott, John


Hattersley, Rt Hon Roy
Price, C. (Lewisham W)


Haynes, Frank
Race, Reg


Healey, Rt Hon Denis
Radice, Giles


Heffer, Eric S.
Rees, Rt Hon M (Leeds S)


Hogg, N. (EDunb't'nshire)
Richardson, Jo


Holland, S.(L'b'th, Vauxh'll)
Roberts, Albert(Normanton)


HomeRobertson, John
Roberts, Allan(Bootle)


Homewood, William
Roberts, Ernest (Hackney N)


Hooley, Frank
Roberts, Gwilym(Cannock)


Howell, Rt Hon D.
Robertson, George


Hoyle, Douglas
Robinson, G. (Coventry NW)


Huckfield, Les
Robinson, P. (Belfast E)


Hughes, Mark(Durham)
Rooker, J. W.


Hughes, Robert (Aberdeen N)
Ross, Ernest (Dundee West)


Hughes, Roy (Newport)
Ross, Wm.(Londonderry)


Janner, HonGreville
Rowlands, Ted


Jay, Rt Hon Douglas
Ryman, John


John, Brynmor
Sever, John


Johnson, James (Hull West)
Sheerman, Barry


Johnson, Walter (Derby S)
Sheldon, Rt Hon R.


Jones, Rt Hon Alec (Rh'dda)
Shore, Rt Hon Peter


Jones, Barry (EastFlint)
Short, Mrs Renée


Jones, Dan (Burnley)
Silkin, RtHonJ. (Deptford)


Kaufman, Rt Hon Gerald
Silkin, Rt Hon S. C. (Dulwich)


Kerr, Russell
Silverman, Julius


Kilfedder, James A.
Skinner, Dennis


Kilroy-Silk, Robert
Smith, Cyril(Rochdale)


Kinnock, Neil
Smith, Rt Hon J. (N Lanark)


Lambie, David
Smyth, Rev. W. M. (Belfast S)


Lamborn, Harry
Snape, Peter


Lamond, James
Soley, Clive


Leadbitter, Ted
Spearing, Nigel


Leighton, Ronald
Spriggs, Leslie


Lestor, MissJoan
Stallard, A. W.


Lewis, Arthur (N'ham NW)
Stewart, Rt Hon D. (W Isles)


Lewis, Ron (Carlisle)
Stoddart, David


Litherland, Robert
Stott, Roger


Lofthouse, Geoffrey
Strang, Gavin


Lyon, Alexander(York)
Straw, Jack


McDonald, DrOonagh
Summerskill, HonDrShirley


McElhone, Frank
Taylor, Mrs Ann (Bolton W)


McGuire, Michael(Ince)
Thomas, Dafydd(Merioneth)


McKay, Allen(Penistone)
Thomas, DrR.(Carmarthen)


McKelvey, William
Thorne, Stan(PrestonSouth)


MacKenzie, Rt Hon Gregor
Tilley, John


McMahon, Andrew
Tinn, James


McNamara, Kevin
Torney, Tom


McTaggart, Robert
Urwin, Rt Hon Tom


McWilliam, John
Varley, Rt Hon Eric G.


Marks, Kenneth
Wainwright, E.(DearneV)


Marshall, D(G'gowS'ton)
Walker, Rt Hon H.(D'caster)


Marshall, DrEdmund(Goole)
Watkins, David


Marshall, Jim (LeicesterS)
Weetch, Ken


Martin, M(G'gowS'burn)
Welsh, Michael


Maxton, John
White, Frank R.


Maynard, MissJoan
White, J. (G'gowPollok)


Meacher, Michael
Whitehead, Phillip


Mellish, Rt Hon Robert
Whitlock, William


Mikardo, Ian
Wigley, Dafydd


Millan, Rt Hon Bruce
Williams, Rt Hon A.(S'sea W)


Mitchell, Austin (Grimsby)
Wilson, Gordon (Dundee E)


Molyneaux, James
Wilson, Rt Hon Sir H.(H'ton)


Morris, Rt Hon A. (W'shawe)
Wilson, William (C'trySE)


Morris, Rt Hon C. (O'shaw)
Winnick, David


Morris, Rt Hon J. (Aberavon)
Woodall, Alec





Woolmer, Kenneth
Tellers for the Noes:


Wright, Sheila
Mr. George Morton and


Young, David (BoltonE)
Mr. Hugh McCartney.

Question accordingly agreed to.

Mr. Speaker: By leave of the House, I shall put together the Question on motions Nos. 15 to 21.

15. VEHICLES EXCISE DUTY (GOODS VEHICLES)

Motion made, and Question,
That, with respect to licences first having effect after 30th September 1982, provision may be made for changing the basis on which duties are charged in respect of goods vehicles under the Vehicles (Excise) Act 1971 and under the Vehicles (Excise) Act (Northern Ireland) 1972.—[Sir Geoffrey Howe.]
put forthwith pursuant to Standing Order No. 94 (Ways and Means motion), and agreed to.

16. VALUE ADDED TAX (REGISTRATION)

Motion made, and Question,

That—

(1) In paragraph 1 of Schedule 1 to the Finance Act 1972 (liability to be registered)—

(a) for "£5, 000" there shall be substituted "£6, 000"; and
(b) for "£15, 000", in each place, there shall be substituted "£17, 000";

and in section 20(1) of that Act (registration of local authorities) for the words following "one year" there shall be substituted the words "does not exceed the sum for the time being specified in paragraph 1(a)(ii) of that Schedule, as if that value exceeded that sum".

(2) In paragraph 2 of that Schedule (termination of liability to be registered)—

(a) "for £15, 000", in both places, there shall be substituted "£17, 000", and
(b) for "£14, 000" there shall be substituted "£16, 000".

(3) Paragraph (1) above shall come into force on 10th March 1982 and paragraph (2) on 1st June 1982.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motion), and agreed to.

17. VALUE ADDED TAX (DISCRETIONARY REGISTRATION AND CANCELLATION OF REGISTRATION)

Motion made, and Question,

That provision may be made as to discretionary registration and the cancellation of registrations under Part I of the Finance Act 1972.—[Sir Geoffrey Howe]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

18. VALUE ADDED TAX (PARTNERSHIPS)

Motion made, and Question,

That provision may be made with respect to the treatment of partnerships for the purposes of value added tax.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

19. VALUE ADDED TAX (RECOVERY OF OVERPAYMENTS)

Motion made, and Question,

That provision may be made for the recovery of certain payments by the Commissioners of Customs and Excise.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

20. CAR TAX (TRANSFER OF STOCKS)

Motion made, and Question,

That provision may be made for transferring liability for car tax in certain cases where stocks of vehicles are transferred.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

21. SURCHARGES AND REBATES IN RESPECT OF REVENUE DUTIES

Motion made, and Question,

That provision may be made amending sections 1 and 2 of the Excise Duties (Surcharges or Rebates) Act 1979.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motion), and agreed to.

22. INCOME TAX (CHARGE AND RATES FOR 1982–83)

Motion made, and Question,

That—

(1) Income tax for the year 1982–83 shall be charged at the basic rate of 30 per cent.: and—

(a) in respect of so much of an individual's total income as exceeds £12, 800 at such higher rates as are specified in the Table below; and
(b) in respect of so much of the investment income included in an individual's total income as exceeds £6, 250 at the additional rate of 15 per cent.

TABLE


Part of excess over £12, 800




Higher rate


The first £2, 300
…
…
…
…
40 per cent.


The next £4, 000
…
…
…
…
45 per cent.


The next £6, 200
…
…
…
…
50 per cent.


The next £6, 200
…
…
…
…
55 per cent.


The remainder
…
…
…
…
60 per cent.

(2) Section 24(4) of the Finance Act 1980 (increase of basic rate limit, higher rate bands and investment income threshold) shall not apply for the year 1982–83.

(3) This Resolution shall not require any change to be made in the amounts deductible or repayable under section 204 of the Income and Corporation Taxes Act 1970 (pay as you earn) before 5th May 1982.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions):—

The House Divided: Ayes 310, Noes 233.

Division No.90]
10.52 pm]


AYES


Aitken, Jonathan
Bright, Graham


Alexander, Richard
Brinton, Tim


Alison, RtHon Michael
Brittan, Rt. Hon. Leon


Aspinwall, Jack
Brooke, Hon Peter


Atkins, Robert(PresfonN)
Brotherton, Michael


Atkinson, David(B'm'th, E)
Brown, Michael(Brigg&amp;Sc'n)


Baker, Kenneth(Sf.M'bone)
Browne, John(Winchtester)


Baker, Nicholas (NDorset)
Bruce-Gardyne, John


Banks, Robert
Bryan, Sir Paul


Beaumont-Dark, Anthony
Buck, Antony


Bendall, Vivian
Budgen, Nick


Bennett, SirFrederic (T'bay)
Bulmer, Esmond


Benyon, Thomas(A'don)
Burden, SirFrederick


Benyon.W. (Buckingham)
Butcher, John


Best, Keith
Butler, Hon Adam


Bevan, David Gilroy
Cadbury.Jocelyn


Biffen, RtHon John
Carlisle, John (LutonWest)


Biggs-Davison, SirJohn
Carlisle, Kenneth(Lincoln)


Blackburn, John
Carlisle, Rt Hon M. (R'c'n)


Bonsor, SirNicholas
Chalker, Mrs. Lynda


Boscawen, HonRobert
Channon, Rt. Hon. Paul


Bottomley, Peter (W'wichW)
Chapman, Sydney


Bowden, Andrew
Churchill, W.S.


Boyson, Dr Rhodes
Clark, Hon A. (Plym'th, S'n)


Braine, SirBernard
Clark, Sir W.(CroydonS)





Clarke, Kenneth(Rushchffe)
Howell, RtHonD.(G'ldf'd)


Clegg, SirWalter
Howell, Ralph (NNorfolk)


Cockeram, Eric
Hunt, David (Wirral)


Colvin, Michael
Hunl, Jorm(Ravensbourne)


Cope, John
Hurd, RtHon Douglas


Cormack, Patrick
Irving, Charles(Cheltenham)


Corrie, John
Jenkin, RtHon Patrick


Costain, SirAlbert
Jessel, Toby


Cranborne, Viscount
JohnsonSmith, Geoffrey


Critchley, Julian
Jopling, RtHonMichael


Crouch, David
Joseph, Rt Hon Sir Keith


Dean, Paul (NorthSomerset)
Kaberry, SirDonald


Dickens, Geoffrey
Kellett-Bowman, MrsElaine


Dorrell, Stephen
Kimball, SirMarcus


Douglas-Hamilton.LordJ.
King, RtHon Tom


Dover, Denshore
Kitson, SirTimothy


Du n n, Robert (Dartford)
Knight, MrsJill


Durant, Tony
Knox, David


Dykes, Hugh
Lamont, Norman


Eden, RtHon Sir John
Lang, Ian


Edwards, Rt Hon N. (P'broke)
Langford-Holt, SirJohn


Eggar, Tim
Latham, Michael


Elliott, SirWilliam
Lawrence, Ivan


Emery, Sir Peter
Lawson, RtHon Nigel


Eyre, Reginald
Lee, John


Fairbairn, Nicholas
LeMarchant, Spencer


Fairgrieve, SirRussell
Lennox-Boyd, HonMark


Faith, MrsSheila
Lester, Jim(Beeston)


Farr, John
Lewis, Kenneth (Rutland)


Fell, SirAnthony
Lloyd, Ian (Havant&amp; W'loo)


Fenner, Mrs Peggy
Lloyd, Peter (Fareham)


Finsberg, Geoffrey
Loveridge, John


Fisher, SirNigel
Luce, Richard


Fletcher, A. (Ed'nb'ghN)
Lyell, Nicholas


Fletcher-Cooke, SirCharles
McCrindle, Robert


Fookes, Miss Janet
Macfarlane, Neil


Forman, Nigel
MacGregor, John


Fowler, RtHon Norman
MacKay, John (Argyll)


Fox, Marcus
McNair-Wilson, M.(N'bury)


Fraser, RtHon Sir Hugh
McNair-Wilson, P. (NewF'st)


Fraser, Peter (South Angus)
McQuarrie, Albert


Fry, Peter
Madel, David


Gardner, Edward (SFylde)
Major, John


Garel-Jones, Tristan
Marland, Paul


Gilmour, RtHon Sir Ian
Marlow, Antony


Glyn, DrAlan
Marshall, Micheal(Arundel)


Goodhart, SirPhilip
Marten, RtHon Neil


Goodhew, SirVictor
Mates, Michael


Goodlad, Alastair
Maude, RtHon Sir Angus


Gorst, John
Mawby, Ray


Gow, Ian
Mawhinney.DrBrian


Grant, Anthony (HarrowC)
Maxton, John


Gray, Hamish
Maxwell-Hyslop, Robin


Greenway, Harry
Mayhew, Patrick


Griffiths, E.(B'ySt.Edm'ds)
Mellor, David


Griffiths.PeterPortsm'thN)
Meyer, Sir Anthony


Grist, Ian
Miller.Hal(B'grove)


Grylls, Michael
Mills, IainfMer/den)


Hamilton, Hon A.
Mills, Peter (WestDevon)


Hamilton, Michael(Salisbury)
Miscampbell, Norman


Hampson.DrKeith
Mitchell, David (Basingstoke)


Hannam, John
Moate, Roger


Haselhurst, Alan
Monro, SirHector


Hastings, Stephen
Montgomery, Fergus


Havers, Rt Hon Sir Michael
Moore, John


Hawkins, Paul
Morgan, Geraint


Hawksley, Warren
Morris, M. (N'hamptonS)


Hayhoe, Barney
Morrison, HonC. (Devizes)


Heath, RtHon Edward
Morrison, Hon P. (Chester)


Heddle, John
Mudd, David


Henderson, Barry
Murphy, Christopher


Heseltine, RtHon Michael
Myles, David


Hicks, Robert
Neale.Gerrard


Higgins, RtHon Terence L
Needham, Richard


Hill, James
Nelson, Anthony


Hogg, HonDouglas(Gr'th'm)
Neubert, Michael


Holland, Philip(Cartton)
Newton, Tony


Hooson, Tom
Normanton, Tom


Hordern, Peter
Onslow, Cranley


Howe, Rt Hon Sir Geoffrey
Oppenheim, Rt Hon Mrs S.






Osborn, John
Squire, Robin


Page, John (Harrow, West)
Stainton, Keith


Page, Richard (SW Herts)
Stanbrook, Ivor


Parkinson, Rt Hon Cecil
Stanley, John


Parris, Matthew
Steen, Anthony


Patten, Christopher(Bath)
Stevens, Martin


Patten, John(Oxford)
Stewart, A.(ERenfrewshire)


Pattie, Geoffrey
Stewart, Ian(Hitchin)


Pawsey, James
Stokes, John


Percival, Sir Ian
Stradling Thomas, J.


Peyton, Rt Hon John
Tapsell, Peter


Pink, R. Bonner
Taylor, Teddy (S'end E)


Pollock, Alexander
Tebbit, Rt Hon Norman


Porter, Barry
Temple-Morris, Peter


Prentice, Rt Hon Reg
Thomas, Rt Hon Peter


Price, Sir David (Eastleigh)
Thompson, Donald


Prior, Rt Hon James
Thorne, Neil(IlfordSouth)


Proctor, K. Harvey
Thornton, Malcolm


Pym, Rt Hon Francis
Townend, John(Bridlington)


Raison, Rt Hon Timothy
Townsend, Cyril D, (B'heath)


Rathbone, Tim
Trippier, David


Rees, Peter (Dover and Deal)
Trotter, Neville


Rees-Davies, W. R.
van Straubenzee, Sir W.


Renton, Tim
Vaughan, DrGerard


RhodesJames, Robert
Viggers, Peter


RhysWilliams, SirBrandon
Waddington, David


Ridley, HonNicholas
Wakeham, John


Ridsdale, SirJulian
Waldegrave, HonWilliam


Rifkind, Malcolm
Walker, B. (Perth)


Rippon, Rt Hon Geoffrey
Walker-Smith, Rt Hon Sir D.


Roberts, M. (Cardiff NW)
Wall, SirPatrick


Roberts, Wyn (Conway)
Waller, Gary


Rossi, Hugh
Walters, Dennis


Rost, Peter
Ward, John


Royle, SirAnthony
Warren, Kenneth


Sainsbury, HonTimothy
Watson, John


St. John-Stevas, Rt Hon N.
Wells, Bowen


Scott, Nicholas
Wells, John(Maidstone)


Shaw, Giles (Pudsey)
Wheeler, John


Shaw, Michael(Scarborough)
Whitelaw, Rt Hon William


Shelton, William(Streatham)
Wickenden, Keith


Shepherd, Colin(Hereford)
Wiggin, Jerry


Shepherd, Richard
Wilkinson, John


Shersby, Michael
Williams, D.(Montgomery)


Silvester, Fred
Winterton, Nicholas


Sims, Roger
Wolfson, Mark


Smith, Dudley
Young, SirGeorge(Acton)


Speed, Keith
Younger, Rt Hon George


Speller, Tony



Spence, John
Tellers for the Ayes:


Spicer, Jim (West Dorset)
Mr. Anthony Berry and


Spicer, Michael (S Worcs)
Mr. Carol Mather.


Sproat, Iain



NOES


Abse, Leo
Cant, R. B.


Allaun, Frank
Carmichael, Neil


Alton, David
Carter-Jones, Lewis


Anderson, Donald
Clark, Dr David (S Shields)


Archer, Rt Hon Peter
Cocks, Rt Hon M. (B'stol S)


Ashley, Rt Hon Jack
Cohen, Stanley


Ashton, Joe
Coleman, Donald


Atkinson, N.(H'gey, )
Concannon, Rt Hon J. D.


Bagier, GordonA.T.
Conlan, Bernard


Barnett, Guy(Greenwich)
Cook, Robin F.


Barnett, Rt Hon Joel (H'wd)
Cowans, Harry


Beith, A. J.
Cox, T.(W'dsw'th, Toot'g)


Benn, Rt Hon Tony
Craigen, J. M.(G'gow, M'hill)


Bennett, Andrew(St'kp'tN)
Crowther, Stan


Bidwell, Sydney
Cryer, Bob


Booth, Rt Hon Albert
Cunliffe, Lawrence


Bray, Dr Jeremy
Cunningham, DrJ. (W'h'n)


Brown, Hugh D. (Pro van)
Dalyell, Tam


Brown, R. C. (N'castle W)
Davidson, Arthur


Buchan, Norman
Davies, Ifor (Gower)


Callaghan, Rt Hon J.
Davis, Clinton (HackneyC)


Callaghan, Jim (Midd't'n&amp;P)
Davis, Terry (B'ham, Stechf'd)


Campbell, Ian
Deakins, Eric


Campbell-Savours, Dale
Dean, Joseph (Leeds West)


Canavan, Dennis
Dixon, Donald





Dobson, Frank
McKay, Allen(Penistone)


Dormand, Jack
McKelvey, Wiiliam


Douglas, Dick
MacKenzie, Rt Hon Gregor


Dubs, Alfred
McMahon, Andrew


Duffy, A. E. P.
McNamara, Kevin


Dunnett, Jack
McTaggart, Robert


Dunwoody, Hon Mrs G.
McWilliam, John


Eadie, Alex
Marks, Kenneth


Eastham, Ken
Marshall, D(G'gowS'burn)


Edwards, R. (W'hampt'n S E)
Marshall, Jim(LeicesterS)


Ellis, R. (NE D'bysh 're)
Martin, M(G'gowS'burn)


English, Michael
Maxton, John


Ennals, Rt Hon David
Maynard, MissJoan


Evans, loan (Aberdare)
Meacher, Michael


Evans, John(Newton)
Mellish, Rt Hon Robert


Ewing, Harry
Mikardo, Ian


Field, Frank
Millan, Rt Hon Bruce


Fitch, Alan
Mitchell, Austin(Grimsby)


Fitt, Gerard
Morris, Rt Hon A. (W'shawe)


Flannery, Martin
Morris, Rt Hon C. (O'shaw)


Fletcher, L.R.(Ilkeston)
Morris, Rt Hon J. (Aberavon)


Fletcher, Ted(Darlington)
Morton, George


Foot, Rt Hon Michael
Mulley, Rt Hon Frederick


Ford, Ben
Newens, Stanley


Forrester, John
Oakes, Rt Hon Gordon


Foulkes, George
O'Halloran, Michael


Fraser, J.(Lamb'th, N'w'd)
O'Neill, Martin


Freeson, Rt Hon Reginald
Orme, Rt Hon Stanley


Garrett, John (Norwich S)
Paisley, Rev Ian


Garrett, W. E. (Wallsend)
Palmer, Arthur


George, Bruce
Park, George


Gilbert, Rt Hon Dr John
Parry, Robert


Golding, John
Pavitt, Laurie


Graham, Ted
Pendry, Tom


Grant, George(Morpeth)
Pitt, William Henry


Hamilton, James(Bothwell)
Powell, Raymond(Ogmore)


Hamilton, W.W. (C'tral Fife)
Prescott, John


Hardy, Peter
Price, C. (Lewisham W)


Harrison, Rt Hon Walter
Race, Reg


Hattersley, Rt Hon Roy
Radice, Giles


Haynes, Frank
Rees, Rt Hon M (Leeds S)


Healey, Rt Hon Denis
Richardson, Jo


Heifer, Eric S.
Roberts, Albert(Normanton)


Hogg, N.(EDunb't'nshire)
Roberts, Allan(Bootle)


Holland, S.(L'b'th, Vauxh'll
Roberts, Ernest(Hackney N)


HomeRobertson, John
Roberts, Gwilym(Cannock)


Homewood, William
Robinson, G. (Coventry NW)


Hooley, Frank
Robinson, P. (Belfast E)


Howell, Rt Hon D.
Rooker, J. W.


Hoyle, Douglas
Ross, Ernest (Dundee west)


Huckfield, Les
Rowlands, Ted


Hughes, Mark(Durham)
Ryman, John


Hughes, Robert(Aberdeen N)
Sheerman, Barry


Hughes, Roy (Newport)
Sheldon, Rt Hon R.


Janner, HonGreville
Shore, Rt Hon Peter


Jay, Rt Hon Douglas
Short, Mrs Renée


John, Brynmor
Silkin, Rt HonJ. (Deptford)


Johnson, James(Hull West)
Silkin, Rt Hon S.C. (Dulwich)


Johnson, Walter (DerbyS)
Silverman, Julius


Jones, Rt Hon Alec (Rh'dda)
Skinner, Dennis


Jones, Barry (East Flint)
Smith, Cyril(Rochdale)


Jones, Dan (Burnley)
Smith, Rt Hon J. (N Lanark)


Kaufman, Rt Hon Gerald
Snape, Peter


Kerr, Russell
Soley, Clive


Kilfedder, James A.
Spearing, Nigel


Kinnock, Neil
Spriggs, Leslie


Lambie, David
Stallard, A. W.


Lamborn, Harry
Steel, Rt Hon David


Lamond, James
Stewart, Rt Hon D. (W Isles)


Leadbitter, Ted
Stoddart, David


Lestor, MissJoan
Stott, Roger


Lewis, Arthur (N'ham NW)
Strang, Gavin


Lewis, Ron(Carlisle)
Straw, Jack


Litherland, Robert
Summerskill, HonDrShirley


Lofthouse, Geoffrey
Taylor, MrsAnn (Bolton W)


Lyon, Alexander(York)
Thomas, Dafydd(Merioneth)


McCartney, Hugh
Thomas, DrR. (Carmarthen)


McDonald, DrOonagh
Thorne, Stan(Preston South)


McElhone, Frank
Tilley, John


McGuire, Michael(Ince)
Tinn, James






Torney, Tom
Williams, Rt Hon A.(S'sea W)


Urwin, Rt Hon Tom
Wilson, Gordon(Dundee E)


Varley, Rt Hon Eric G.
Wilson, Rt Hon Sir H.(H'ton)


Wainwright, E.(DearneV)
Wilson, William (C'trySE)


Walker, Rt Hon H.(D'caster)
Winnick, David


Watkins, David
Woodall, Alec


Weetch, Ken
Woolmer, Kenneth


Welsh, Michael
Wright, Sheila


White, Frank R.
Young, David (Bolton E)


White, J.(G'gow Pollok)



Whitehead, Phillip
Tellers for the Noes:


Whitlock, William
Mr. Ron Leighton and


Wigley, Dafydd
Dr. Edmund Marshall

Question accordingly agreed to.

Mr. Speaker: By leave of the House, I shall put together the Question on motions Nos. 23 to 53.

23. INCOME TAX (PERSONAL RELIEFS)

Motion made, and Question,

That—

(1) Section 24(5) of the Finance Act 1980 (increase of personal reliefs) shall not apply for the year 1982–83.

(2) In section 8 of the Income and Corporation Taxes Act 1970 (personal reliefs)—

(a) in subsection (1)(a) (married) for "£2, 145" there shall be substituted "£2, 445";
(b) in subsection (1)(b) (single) and (2) (wife's earned income relief) for "£1, 375" there shall be substituted "£1, 565";
(c) in subsection (1A) (age allowance) for "£2, 895" and "£1, 820" there shall be substituted "£3, 295" and "£2, 070" respectively;
(d) in subsection (1B) (income limit for age allowance) for "£5, 900" there shall be substituted "£6, 700".

(3) This Resolution shall not require any change to be made in the amounts deductible or repayable under section 204 of the Income and Corporation Taxes Act 1970 (pay as you earn) before 5th May 1982.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.— [Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

24. RELIEF FOR INTEREST (LIMIT FOR 1982–83)

Motion made, and Question, 
That the limit imposed by paragraph 5 of Schedule 1 to the Finance Act 1974 shall, subject to any reduction to be made under that paragraph, be £25, 000 for the year 1982–83.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

25. CORPORATION TAX (CHARGE AND RATE FOR FINANCIAL YEAR 1981

Motion made, and Question, 
That corporation tax shall be charged for the financial year 1981 at the rate of 52 per cent.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

26. ADVANCE CORPORATION TAX (RATE FOR FINANCIAL YEAR 1982)

Motion made, and Question, 
That the rate of advance corporation tax for the financial year 1982 shall be three-sevenths.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

27. CORPORATION TAX (SMALL COMPANIES)

Motion made, and Question,

That—


(a) the small companies rate for the financial year 1981 shall be 40 per cent.; and
(b) the fraction by reference to which corporation tax charged on income is reduced under section 95(2) of the Finance Act 1972 shall for that financial year be two twenty-fifths.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

28. JOB RELEASE SCHEME ALLOWANCES AND MATERNITY PAY

Motion made, and Question,

That—

(1) 10/19/2006E any amount paid in respect of a period beginning on or after 6th April 1982—

(a) as an allowance under a scheme of the kind described in the Job Release Act 1977 other than an allowance to which section 30 of the Finance Act 1977 applies; or
(b) as maternity pay (whether paid during the subsistence of a contract of employment or not) within the meaning of section 33 of the Employment Protection (Consolidation) Act 1978 or, in Northern Ireland, Article 15 of the Industrial Relations (No. 2) (Northern Ireland) Order 1976.

(2) This Resolution shall not require any change to be made in the amounts deductible or repayable under section 204 of the Income and Corporation Taxes Act 1970 (pay as you earn) before 5th May 1982.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.— [Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

29. STATUTORY SICK PAY

Motion made, and Question, 
That provision may be made with respect to the charging to income tax under Schedule E of payments made to employees in respect of periods of absence from employment by reason of their incapacity for work in accordance with the requirements of any Act of the present Session or, in Northern Ireland, of any Order in Council made under the Northern Ireland Act 1974.— [Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

30. SUPPLEMENTARY BENEFITS

Motion made, and Question, 
That charges to income tax may be imposed by amendments of section 27 of the Finance Act 1981 (taxation of certain social security payments).—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

31. PAYMENTS FOR LOSS OF EMPLOYMENT ETC.

Motion made, and Question,

That—

(1) Schedule 8 to the Income and Corporation Taxes Act 1970 (tax on payments for loss of employment etc.) shall have effect with the insertion at the beginning of paragraph 7 of the words "Subject to sub-paragraph (2) below" and with the addition, at the end of that paragraph, of the following:—

"(2) In the case of a payment which exceeds £50, 000, this paragraph applies as if it were a payment of £50, 000 exactly.

7A.—(1) Subject to subparagraph (2) below, in the case of a payment which exceeds £50, 000 and in respect of which tax is chargeable under section 187 of this Act, the following relief shall be allowed by way of deduction from the tax chargeable by virtue of that section, that is to say, there shall be ascertained—

(a) the amount of tax which would be chargeable apart from this paragraph and paragraph 7 above in respect of the income of the holder or past holder of the office or employment for the chargeable period of which the payment is treated as income, and


(b) the amount of tax which would be so chargeable if the amount of the payment had been £50, 000 exactly.

and the amount to be deducted shall be one-quarter of the difference between the amount ascertained at (a) and the amount ascertained at (b)

(2) In the case of a payment which exceeds £75, 000, this paragraph applies as if it were a payment of £75, 000 exactly.

(3) Any relief allowed by virtue of this paragraph shall be in addition to that allowed by virtue of paragraph 7 above."

(2) Paragraph (1) of this Resolution shall have effect in relation to any payment which, by virtue of section 187(4) of the Income and Corporation Taxes Act 1970, is treated as income received on or after 6th April 1982.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.— [Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

32. BENEFITS IN KIND (CARS AND FUEL)

Motion made, and Question, 
That provision may be made for postponing the coming into force of certain provisions of section 68 and of section 69 of the Finance Act 1981 and for amending sections 64 and 69 of the Finance Act 1976.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

33. BENEFITS IN KIND (CREDIT CARDS, VOUCHERS, SPECIALISED CHEQUES, ETC.)

Motion made, and Question, 
That provision may be made for extending the scope of, and otherwise amending, section 36 (vouchers) and section 36A (credit-tokens) of the Finance (No. 2) Act 1975.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

34. MAINTENANCE FUNDS FOR HISTORIC BUILDINGS

Motion made, and Question, 
That charges to income tax may be imposed by provisions relating to the withdrawal by the Treasury of directions given under section 84 of the Finance Act 1976.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

35. PROFIT SHARING SCHEMES (INCREASE OF MAXIMUM SHARE APPROPRIATION)

Motion made, and Question,

That—

(1) With respect to shares appropriated on or after 6th April 1982, subsections (1) and (2) of section 58 of the Finance Act 1978 (shares in excess of initial market value of £1, 000) shall have effect as if for "£1, 000" there were substituted "£1, 250".

(2) With effect from 6th April 1982 paragraph 1(4) of Schedule 9 to that Act (profit sharing schemes to provide that total initial market values of shares appropriated to one participant yearly must not exceed £1, 000) shall have effect as if for "£1, 000" there were substituted "£1, 250".

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.— [Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

36. PROFIT SHARING (CAPITAL RECEIPTS)

Motion made, and Question, 
That charges to income tax may be imposed by amendments of section 56 of the Finance Act 1978 (capital receipts in respect of approved profit sharing schemes).—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

37. CAPITAL GAINS (SETTLED PROPERTY)

Motion made, and Question, 
That charges to capital gains tax and corporation tax may be imposed by provisions relating to settled property.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

38. PURCHASE ETC. BY A COMPANY OF ITS SHARES

Motion made, and Question.
That charges to income tax, corporation tax and capital gains tax may be imposed by provisions relating to the redemption, repayment or purchase by a company of its own shares.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

39. CAPITAL TRANSFER TAX (SETTLED PROPERTY)

Motion made, and Question.
That charges to capital transfer tax may be imposed by provisions relating to settled property.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

40. PETROLEUM REVENUE TAX

Motion made, and Question.

That, with respect to chargeable periods ending alter 31st December 1982—

(a) the rate of petroleum revenue tax shall be increased from 70 per cent. to 75 per cent.; and
(b) charges to petroleum revenue tax may be imposed by provisions requiring persons who are, or are treated as, participators for the purposes of the Oil Taxation Act 1975 to make advance payments of petroleum revenue tax at the rate of 20 per cent. by reference to the gross profits (Calculated as Parliament may determine) accruing to them from oil fields; and
(c) new provision may be made with respect to the payment of petroleum revenue tax in instalments.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

41. SUPPLEMENTARY PETROLEUM DUTY

Motion made, and Question.
That supplementary petroleum duty shall be charged for the chargeable period ending on 31st December 1982.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

42. OIL TAXATION (ETHANE)

Motion made, and Question, 
That, for the purposes of petroleum revenue tax and supplementary petroleum duty, provision may be made with respect to the valuation of ethane which, within the meaning of Part I of the Oil Taxation Act 1975, is disposed of otherwise than in a sale at arm's length or is relevantly appropriated and, in either case, is used for petrochemical purposes.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

43. OIL TAXATION (PROFITS ARISING BEFORE DETERMINATION OF FIELD)

Motion made, and Question, 
That provision may be made relating to profits from oil won before the determination of an oil field.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

44 REGIONAL DEVELOPMENT GRANTS (OIL INDUSTRY)

Motion made, and Question, 
That charges to petroleum revenue tax and corporation tax may be imposed by provisions about grants made under Part I of the Industry Act 1972 and grants which are made under legislation applicable in Northern Ireland and which are determined by the Treasury to correspond to grants under the said Part I.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

45. MANUFACTURED DIVIDENDS

Motion made, and Question, 
That provision may be made for extending section 477 of the Income and Corporation Taxes Act 1970 to certain securities, interest on which is payable without deduction of tax.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

46. DISTRIBUTIONS

Motion made, and Question, 
That provision may be made for amending the meaning of "distribution" for the purposes of the Corporation Tax Acts.— [Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means Motions), and agreed to.

47. ADDITIONAL PAYMENTS BY PROGRAMME CONTRACTORS

Motion made, and Question, 
That provision may be made (with retrospective effect) for modifying the effect of orders under section 32 of the Broadcasting Act 1981.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means Motions), and agreed to.

48. RECOVERY OF CERTAIN OVERPAYMENTS

Motion made, and Question, 
That provision may be made for the recovery of certain payments made by the Commissioners of Inland Revenue.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means Motions), and agreed to.

49. INTEREST ON UNPAID TAX

Motion made, and Question, 
That new provision may be made with respect to interest on unpaid tax.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means Motions), and agreed to.

50. REDUCTION OF STAMP DUTY ON CONVEYANCES AND LEASES

Motion made, and Question,

That the following provisions shall have effect for the period beginning 22nd March 1982 and ending 31 days after the earliest of the dates mentioned in section 50(2) of the Finance Act 1973—

(1) In subsection (1) of section 55 of the Finance Act 1963 and in the Table in Part I of Schedule 11 to that Act (under which stamp duty is not chargeable on conveyances and transfers certified at £20, 000 and is chargeable at reduced rates on those certified at £25, 000, £30, 000 and £35, 000 and in subsection (1) of section 4 of the Finance Act (Northern Ireland) 1963 and in the Table in Part I of Scedule 1 to that Act (which makes similar provision for Northern Ireland)) for "£20, 000", "£25, 000", "£30, 000" and "£35, 000", wherever occurring, there shall be substituted respectively "£25, 000", "£30, 000", "£35, 000" and "£40, 000".

(2) In subsection (2) of the said section 55 and of the said section 4 (under which the relief afforded by subsection (1) of those sections is not available as respects the duty chargeable in respect of the premium for a lease if the consideration includes rent exceeding £250 a year) for "£250" there shall be substituted "£300".

(3) In the heading "Lease or Tack" in Schedule 1 to the Stamp Act 1891 as it applies throughout the United Kingdom—

(a) in paragraph (2)(a) (duty where definite term less than a year of furnished dwelling-house and rent exceeds £400) for "£400" there shall be substituted "£500", and
(b) in the Table in paragraph (3) (which provides for duty on rent in the case of any other term and the first column of which indicates the rent, the second column the duty where the term does not exceed 7 years or is indefinite, the third column the duty where the term exceed 7 years but not 35 years, the fourth column the duty where the term exceeds 35 years but not 100 years and the fifth column the duty where the term exceeds 100 years) for the last entry there shall be substituted—

Exceeding £400 and not exceeding £450
Nil
9·00
54·00
108·00


Exceeding £450 and not exceeding £500
Nil
10·00
60·00
120·00


Exceeding £500 for any full sum of £50 and also for any fractional part thereof.
0·50
1·00
60·0
12·00"

(4) The foregoing provisions shall apply to instruments executed on or after 22nd March 1982.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of section 50 of the Finance Act 1973.— [Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

51. STAMP DUTY: EXEMPTION ON GRANTS TRANSFERS TO CHARITIES, ETC.

Motion made, and Question,

That the following provisions shall have effect for the period beginning 22nd March 1982 and ending 31 days after the earliest of the dates mentioned in section 50(2) of the Finance Act 1973—

(1) Subject to paragraph (2) of this Resolution, where any conveyance, transfer or lease is made or agreed to be made to a body of persons established for charitable purposes only or to the trustees of a trust so established or to the Trustees of the National Heritage Memorial Fund, no stamp duty shall be chargeable by virtue of—

(a) any of the following headings in Schedule 1 to the Stamp Act 1891, namely, "Conveyance or Transfer on Sale", "Conveyance or Transfer of any kind not hereinbefore described" and "Lease or Tack", or
(b) section 74 of the Finance (1909–10) Act 1910 (gifts inter vivos),

on the instrument by which the conveyance, transfer or lease, or the agreement for it, is effected.

(2) An instrument in respect of which stamp duty is not chargeable by virtue only of paragraph (1) of this Resolution shall not be treated as duty stamped unless it is stamped in accordance with section 12 of the Stamp Act 1891 with a stamp denoting that it is not chargeable with any duty.

(3) The foregoing provisions shall apply to instruments executed on or after 22nd March 1982.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of section 50 of the Finance Act 1973.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

52. STAMP DUTY ON CERTAIN SUBSTITUTED LIFE POLICIES

Motion made, and Question,

That the following provisions shall have effect for the period beginning 25th March 1982 and ending 31 days after the earliest of the dates mentioned in section 50(2) of the Finance Act 1973—

(1) Where, as a result of a variation in the life or lives for the time being assured, a policy (in this Resolution referred to as "the earlier policy") which is a qualifying policy within the meaning of Part I of Schedule 1 to the Income and Corporation Taxes Act 1970 is replaced by a new policy (in this Resolution referred to as "the later policy") which, in accordance with the rules in paragraph 9 of that Schedule, is also a qualifying policy then, subject to paragraph (2) below, stamp duty shall not be chargeable on the policy of life insurance which is the later policy if it comes into existence on or after 25th March 1982.

(2) Paragraph (1) above does not apply unless—

(a) any sum which would otherwise become payable by the insurer on or in connection with the coming to an end of the earlier policy is retained by the insurer and applied in the discharge of some or all of the liability for any premium becoming due under the later policy; and
(b) no consideration in money or money's worth (other than the benefits for which provision is made by the later policy) is receivable by any person on or in connection with the coming to an end of the earlier policy or the coming into existence of the later policy.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of section 50 of the Finance Act 1973.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

53. RELIEF FROM TAX (INCIDENTAL AND CONSEQUENTIAL CHARGES)

Motion made, and Question, 
That it is expedient to authorise any incidental or consequential charges to any duty or tax (including charges having retrospective effect) which may arise from provisions designed in general to afford relief from tax.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

PROCEDURE RESOLUTIONS

Mr. Speaker: By leave of the House, I shall put together the four procedure resolutions.

PROCEDURE (GILT-EDGED UNIT TRUSTS)

Motion made, and Question, 
That, notwithstanding anything to the contrary in the practice of the House relating to matters which may be included in a Finance Bill, any Finance Bill of the present Session may make provision for authorised unit trusts to which section 60 of the Finance Act 1980 applies to be narrower-range investments for the purposes of the Trustee Investments Act 1961.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

PROCEDURE (NATIONAL SAVINGS BANK)

Motion made, and Question, 
That, notwithstanding anything to the contrary in the practice of the House relating to matters which may be included in

Finance Bills, any Finance Bill of the present Session may contain provisions relating to deposits in the National Savings Bank.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

PROCEDURE (LOANS BY PUBLIC WORKS LOAN COMMISSIONERS)

Motion made, and Question.
That, notwithstanding anything to the contrary in the practice of the House relating to matters which may be included in Finance Bills, any Finance Bill of the present Session may contain provision for enabling the Public Works Loan Commissioners to make further loans in pursuance of section 3 of the National Loans Act 1968.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

PROCEDURE (FUTURE TAXATION)

Motion made, and Question.
That, notwithstanding anything to the contrary in the practice of the House relating to matters which may be included in Finance Bills, any Finance Bill of the present Session may contain the following provisions taking effect in a future year—

(a) provisions relating to the deduction of tax from interest on certain loans;
(b) provisions relating to benefits in kind;
(c) provisions relating to small maintenance payments; and
(d) provisions relating to petroleum revenue tax.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

FINANCE [MONEY]

Queen's Recommendation having been signified—

Motion made, and Question, 
That, for the purposes of any Act of the present Session relating to finance, it is expedient to authorise any increase in the sums to be issued out of or paid into the National Loans Fund which is attributable to any provision of that Act enabling the Public Works Loans Commissioners to make further loans in pursuance of section 3 of the National Loans Act 1968 up to a limit of £16, 000 million.—[Sir Geoffrey Howe.]

put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

Bill ordered to be brought in upon the foregoing Resolutions by the Chairman of Ways and Means, the Chancellor of the Exchequer, Mr. Secretary Heseltine, Mr. Secretary Jenkin, Mr. Secretary Howell, Mr. Secretary Fowler, Mr. Secretary Lawson, Mr. Leon Brittan, Mr. Barney Hayhoe, Mr. Jock Bruce-Gardyne and Mr. Nicholas Ridley.

FINANCE

Bill to grant certain duties, to alter other duties and to amend the law relating to the National Debt and the Public Revenue and to make future provision in connection with Finance, presented accordingly by Mr. Nicholas Ridley and read the First time; to be read a Second time tomorrow and to be printed. [Bill 85.]

Orders of the Day — Prevention of Terrorism

The Secretary of State for the Home Department (Mr. William Whitelaw): I beg to move,
That the draft Prevention of Terrorism (Temporary Provisions) Act 1976 (Continuance) Order 1982, which was laid before this House on 24 February, be approved.
The purpose of this order, which was laid before the House on 24 February, is to continue in operation for a further year the Prevention of Terrorism (Temporary Provisions) Act 1976. The Act is due to lapse, unless renewed, on 24 March.
This is the third time that I have come before the House to seek the renewal of the Prevention of Terrorism Act. It is my firm belief that renewal of the Act is necessary and justified, but I seek the renewal in no routine spirit. I have consulted those whose job it is to protect us from terrorism, and I have considered the need for the Act in great detail. As a result, I feel bound to recommend that we should keep these unwelcome powers for a further year.
We on the British mainland were reminded forcibly and tragically only a few months ago of the evil and vicious crimes of those who seek political change in Ireland by means of violence and of the need for this Act as an important element in our defence. The Provisional IRA bombing campaign in London in October and November is fresh in all our minds. The Chelsea Barracks nail bomb, in which two passers-by were killed and over 40 soldiers and civilians injured; the bombing of the car of Lt. General Sir Steuart Pringle, who, I am delighted to see, has made such a speedy recovery; the Oxford Street bombs, one of which caused the death of the courageous Metropolitan Police bomb disposal officer, Mr. Kenneth Howorth; the bombing of the London home of my right hon. and learned Friend the Attorney-General; and the placing of explosive in a toy pistol—such as any child might pick up—which blew up and injured two women outside Woolwich Barracks—these were all the work of men who treat human life with contempt, and who are prepared to murder and maim without compunction in the hope of advancing their cause. We rely on the police to protect us from these evil men; and in this task the police deserve the support of us all. But, as I shall show when I come to describe the use of the Act over the past 12 months, they also require the additional powers to deal with terrorism which Parliament has granted them under this Act.
The Prevention of Terrorism Act makes a considerable inroad into the civil liberties of which we are justly proud, and I understand and share the concern of hon. Members that the powers it contains should continue to be necessary. This concern is reflected in the fact that the Act remains a temporary measure, which would lapse without annual consideration and approval by Parliament. It is reflected also in a proper and understandable demand that the powers be kept under close scrutiny. Right hon. and hon. Members will recall that Lord Shackleton carried out a most valuable review of the Act's operation in 1978. As I announced last week, I have decided that the time is now right to hold a further review, with the same terms of reference as those chosen by the Government in 1978 for the Shackleton review—namely,
Accepting the continued need for legislation against terrorism, to assess the operation of the Prevention of Terrorism

(Temporary Provisions) Act 1976, with particular regard to the effectiveness of this legislation and its effect on the liberties of the subject, and to report".
The right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) expressed the Opposition's view on this last year in the debate on the motion for a review. He said on that occasion:
The motion which I commend to the House does not even call for an inquiry into the necessity for an Act. It calls for an inquiry into the operation of the Act—the sort of inquiry that my right hon. and noble Friend the Lord Shackleton undertook in 1978".—[Official Report,  18 March 1981; Vol. 1, c. 338.]
I agree that enough time has now passed since Lord Shackleton finished his work to make a further review worth while. We agree that the review ought not to focus on whether or not we need the Act. The events of October and November merely reinforce what the right hon. Gentleman had to say on that point a year ago.
I have consulted my right hon. Friend the Secretary of State for Northern Ireland, and he has agreed that the review will deal with the operation of the Act both in Great Britain and in Northern Ireland. As with the Shackleton inquiry, it will be carried out by one person, taking evidence in private but with a report to be published in full. I am delighted that I am able to inform the House that my right hon. and noble Friend Lord Jellicoe has accepted my invitation to carry out the review. The aim will be for the report to be published in time for it to be discussed when the Act is next due to lapse.
Hon. Members will be aware that Lord Shackleton made a number of recommendations for improvements in the operation of the Act, and it will be part of the task of this review to examine how they have worked out in practice. It will also, of course, consider all the powers which the Act contains, to see what use has been made of them since Lord Shackleton reported, and what complaints have been made of their possible misuse, as well as their drawbacks for our civil liberties and their benefits in the prevention of terrorist acts.
I turn now to the use of the Act over the past year. From the time the 1974 Act came into force up to the end of last month, over 5, 300 people have been detained in Great Britain under its provisions, 257 in the past year. This number is the lowest of any year since the legislation was introduced. Over the last year, I or my right hon. Friend the Secretary of State for Scotland granted 50 extensions of detention beyond 48 hours—again, by far the lowest number for any year since the Act came into force. These reductions can be explained in a number of ways. My own view is that they are due in the main to the deterrent effect of the port and internal controls carried out under the Act, and to the sensitivity and selectivity of those who administer them. This interpretation is supported by the fact that the proportion of those detained who are subsequently charged or excluded is substantially higher than in the early years of the Act's operation. Of course, decisions taken since 1974 to exclude those involved in Irish terrorism have substantially reduced the number of such people who can enter the country legally.
Part II of the Act empowers me to make exclusion orders. To make an order I must be satisfied that a person is or has been concerned in the commission, preparation or instigation of acts of terrorism. I carefully consider every application for exclusion that the police put before me. Since 1974, the police in Great Britain have made 320 applications, and 277 orders have been signed. The equivalent figures for the past year are 13 applications and


eight orders signed. This figure, too, is considerably lower than in any earlier year of the Act's operation. None of those excluded in the past year made representations to have their case considered by one of my advisers.
Under the arrangements to review an exclusion order three years after it is made, I have in the last 12 months revoked nine orders and confirmed two others. Eleven cases are currently under review. Altogether, I have revoked 12 orders as a result of this three-year review, 14 following representations to an adviser and six for other reasons—a total of 32 revocations. As I have explained to the House before, it is for excluded persons to ask for a review in the first instance, but there are arrangements for them to write to their last known address when they become elegible to have their order reviewed. I consider personally all such reviews.
The Act does not, of course, apply only in Great Britain. Parts II and III extend to Northern Ireland as well. During 1981, 495 people were arrested in Northern Ireland under section 12 of the Act, and my right hon. Friend the Secretary of State for Northern Ireland granted 403 applications for extensions beyond 48 hours. A substantial proportion of those detained are subsequently charged with offences, and my right hon. Friend is satisfied that this power is of great assistance to the Royal Ulster Constabulary in its fight against terrorism in Northern Ireland. In 1981, my right hon. Friend signed orders excluding 11 people from Northern Ireland or from the United Kingdom as a whole.
The police tell me that the powers contained in the Act remain a vital weapon in their fight against terrorism. I accept this view. It may help to put it in context if I refer briefly to a recent case in which use of the Act was instrumental in the success of a police operation. In April 1981, a routine check was made at a postal sorting office in Glasgow of three parcels posted in Canada to addresses in the Strathclyde area. The parcels were found to contain arms and ammunition. After inquiries, 19 people were arrested under the Act's powers. As a direct result of the interviews of these people, and after extensions of detention beyond 48 hours had been granted by my right hon. Friend the Secretary of State for Scotland, a further quantity of firearms, ammunition and detonators was discovered, which had been destined for use in Northern Ireland by members of the Ulster Volunteer Force. Of the 19 detained, nine were subsequently charged with offences, including conspiracy and contravention of the Firearms, Explosives Substances and Prevention of Terrorism Acts. Eight of the nine were subsequently found guilty and they received sentences of imprisonment ranging from four to 11 years.

Mr. Reginald Freeson: Is the right hon. Gentleman telling the House that there are no other powers open to the authorities under which such action could have been effectively taken?

Mr. Whitelaw: I could not, of course, absolutely say that there were no other powers in any circumstances which might not have been available in some of these cases. That would be an absurd thing to ask any Minister to say. In general terms, the answer to the right hon. Gentleman's question is "Yes".
I wish that we could do without the powers in this Act. But the events of the past few months, and the effective use to which the Act has been put, convince me that for

the present such powers remain essential and that we must not take away this vital weapon from the police. The review which I have announced will enable us to consider whether the powers are being operated as we should wish: with the minimum of inconvenience to innocent members of the public, with the least possible infringement of civil liberties, but with as much effect as possible in combating the work of the evil men who use violence for political ends. I seek the agreement of the House to the renewal of the Prevention of Terrorism Act for a further 12 months.

Mr. Roy Hattersley (Birmingham, Sparkhrook): I begin by offering what I am sure is the sympathy of the whole House to those who have suffered in Northern Ireland tonight from the renewed campaign of violence. I know that the House speaks with united determination to see such terror brought to an end and those who have perpetrated such acts of terror brought to justice. If there is a difference, as there is, between the Home Secretary and myself this evening, it is in no small measure an argument about the way that the campaign against terrorism and violence can be most successfully prosecuted.
Having said that, I must tell the Home Secretary and the House that it would be dishonest of me to pretend that I feel anything except the deepest distaste for the Prevention of Terrorism Act and the thought of its being extended for another year. I regard it as wrong in principle and a severe and substantial infringement of civil liberties, and I have grown increasingly dubious about its practical advantages and ability to make a net contribution to the campaign against terrorism and violence. I use the term "net contribution" for reasons that I shall now try to explain.
I have no doubt that the operation of the Act—the arrest of men and women against whom no charges are made, their detention for 48 hours and their occasional banishment to specific parts of the United Kingdom—provides help of a sort to the security services. The Act may deter some acts of individual terrorism and it certainly enables the collection of useful information. However, I seriously question whether the assistance it provides matches the damage it has done to the cause of law and order in the United Kingdom in general and in Northern Ireland in particular.
The Act's existence is consciously exploited by law and order enemies, who continue to say that the British Government are behaving in a way which is, in itself, a threat to the freedom that the British Government claim to protect. The truth of the matter is that in this, as in so many similar operations, the duty of the Government is to drive a wedge between the few men of violence and majority of the law-abiding population. My fear is that it now drives the wedge at the wrong point and that many people, without any sympathy for violence—many who have nothing but abhorrence for the appalling acts that have taken place in Ireland and, indeed, on the mainland over the past seven years—are growing increasingly concerned about its continued existence and, therefore, begin to have the unequivocal commitment to the generality of the Government's policies put in doubt.
I know that judgment about the net value of the Act is in truth no more than an opinion that I cannot substantiate. Indeed, it is the nature of the Prevention of Terrorism Act that we must accept or reject its continuation without


adequate evidence. Despite the individual example that the Home Secretary has given this evening, to which I shall turn in a moment, it is in the nature of the Act that we cannot be told how it has worked, or be really advised about the consequences of its repeal. We must take it on trust from the Home Secretary, and from those who advise him, that it is necessary, or we must challenge the judgment which by the nature of the measure they cannot substantiate publicly in any detail.
I mean it as no offence to the Home Secretary, whose integrity I regard as being beyond question, when I say that the principle of accepting such powers on trust is wholly repugnant, or ought to be, in a proper democracy. That is particularly true if such draconian powers were originally accepted by this House as a temporary measure, intended to meet an immediate and desperate emergency, and have gradually over the years grown more and more permanent until today it is difficult to determine how different in any real sense they are from a permanent Act of Parliament—a permanent part of our criminal procedures.
Theoretically, they receive the House of Commons assent for renewal every year, but in practice they are too often charged through this House late at night after other eye-catching, headline-catching business has been concluded. After last year, when the Government managers provided a proper debate on a crucial subject at a proper hour, it is deeply disappointing that once again we have turned to this matter of great principle in the hole-and-corner way in which we examine it this evening. I say that working on the principle that I believe guides many of my right hon. and hon. Friends, that it is only necessary to summarise parts II and HI of the Act to be offended by its continual existence.
The Act entitles the Home Secretary to exclude from Great Britain, or in some circumstances from the United Kingdom, persons not normally resident in one of those places—persons who, he believes in his judgment, are terrorists. It allows the police to detain for 48 hours without trial men and women whom they suspect of being terrorists, and it allows the detention of those men and women to be extended to seven days on the Home Secretary's fiat. The hard fact of the existence of this Act, as revealed in the Home Secretary's own statistics, is that only one of out nine such men and women held under those powers has eventually been successfully prosecuted. Eight our of every nine people held without charge and trial have been innocent men and women.

Mr. Eldon Griffiths: No.

Mr. Hattersley: The hon. Member for Bury St. Edmunds (Mr. Griffiths), who one might imagine would leap at the point, says "No". It is a fundamentally damaging and dangerous thing when people say "We did not charge or try them, they were not convicted, but we happened to know they were guilty". If there was ever the top of a slippery slope moving away from the freedoms that the House is supposed to protect, the idea that we happen to know people are guilty—despite the minor inconvenience that the courts cannot find them so—seems to be a fundamentally dangerous proposition for anyone to defend.
I take the example that the Home Secretary has given this evening. As I understand his figures, 19 persons having been detained for a crime, which all of us must be

glad eventually resulted in a successful prosecution, only eight people were so prosecuted and convicted. The case cited to us by the Home Secretary, which produced eight prosecutions, was also a case in which 11 people, who were not guilty of anything according to the courts, were held for either 48 hours or seven days.

Mr. Eldon Griffiths: The right hon. Gentleman will remember, perhaps more poignantly than most hon. Members, the Birmingham pub bombings. Is he asking the House to accept that the police and security services should never act pre-emptively to prevent such an event from happening again, even though the matter is not justiciable?

Mr. Hattersley: I find the concept of the police acting pre-emptively terrifying. I do not believe that is a term that either the Home Secretary or police officers would use. I hold to the view that the police should be given adequate powers to prosecute those who have a legitimate chance of being found guilty in a court. To be held without that prospect is a fundamental danger.
I tell the hon. Member for Bury St. Edmunds, as I told the House last year, that nobody remembers more poignantly—his word—than me the Birmingham pub bombings, those who died and those who were injured. Six of the very young men and women who died were my constituents. I do not propose to harrow the House by trying to explain my feelings on the day when, with the then Home Secretary and my right hon. Friend the Member for Birmingham, Small Heath (Mr. Howell), I first visited the scene of the bombings and then, more desperately, the hospitals and the bereaved relatives.
It was the feelings of those days and the strong anti-Irish feeling that existed in Birmingham and elsewhere—I put it simply and crudely—that justified the introduction of this extraordinary Act. Those of us who voted for the legislation then—and we do not apologise for doing so—voted for it in the belief that it was what it claimed to be: a temporary provision. It is wholly reasonable and consistent, feeling about it as we did seven years ago, to feel that there is no obligation to feel the same way about it year after year as it gradually passes-I use the words again—into something very like permanent powers.
I make no complaint about that part of the Act that proscribes certain terrorist organisations. It seems wholly reasonable that they should be proscribed and prevented from propagating their evil beliefs and raising funds in the United Kingdom to propagate those beliefs. My only query about that part of the Act is whether it should include all the potential terrorist organisations which are, but should not be, allowed to operate freely.
I wholly support the idea of the IRA being treated in that way, but I think the time is coming when we should consider whether Protestant organisations ought to be examined and perhaps proscribed in the sanie fashion. However, it is not that part of the Act about which I complain or have the greatest fears. It is those powers, which I can only describe as arbitrary, which are given to the Home Secretary and the police force and which should cause us the deepest concern and disquiet.
We have been told—and I am sure that we shall be told again between now and the time when we come to vote or not—that my repugnance for the Act is felt on both sides of the House. Indeed, a feature of debates on the Act and its renewal, since Mr. Roy Jenkins introduced it, has been


that all those who supported it have been repelled by it. Mr. Roy Jenkins, on the day that he introduced the legislation, described it as "justified only by a wholly exceptional situation".—[Official Report,  28 November 1974; Vol. 882, c. 635.]
I repeat, every Government and Opposition spokesman has expressed "deep concern" and "deep disquiet" about the infringement of civil liberties. Indeed, the Home Secretary talked about the considerable erosion of civil liberties.
Last year the Home Secretary was even more precise. The right hon. Gentleman accepted my judgment, because he said:
As the right hon. Member for Sparkbrook said, they"—
the powers—
infringe our shared concept of civil liberties."—[Official Report,  18 March 1981; Vol. 1, c. 341.]
As parliamentarians and democrats, we all hate the Prevention of Terrorism Act, but not enough of us hate it sufficiently to get rid of it. I must make my view absolutely clear. Only in the most exceptional circumstances—circumstances similar to the slaughter of the people in the Birmingham pub in 1974 and the violent reaction to those outrages, the 21 deaths and the 170 people injured—would I regard the continuation of the Act as justified. I cannot believe that if the right hon. Gentleman and I were in opposite roles this evening I would be asking for the Act to be renewed.

Sir John Biggs-Davison: Is the right hon. Gentleman saying that the danger is all that much less than it was in 1974?

Mr. Hattersley: I have already said that it is difficult to make a judgment on these matters. We are required to vote for the continuation of this Act virtually blindfolded. To do so I would have to be satisfied of three things. First, I would have to be satisfied that the danger was as extreme and immediate as when the Act was introduced, secondly that this was the only way of combating the danger—that there was no way that was more acceptable to our traditions of liberty—and thirdly I would have to be satisfied that by operating in this way we were not playing into the hands of the violent men and women who want to be able to say that the Parliament at Westminster, the British Government, the imperial Parliament is behaving in an arbitary, Draconian and totalitarian way.
I must say in all fairness to the Home Secretary that when we debated this matter a year ago I asked him specifically for an inquiry. Modestly, I did not ask for an inquiry into the necessity for the Act. I did not ask for some distinguished person to justify its existence. I simply asked for the sort of inquiry that my right hon. Friend the Member for Leeds, South (Mr. Rees) instituted when Lord Shackleton was asked to see how the Act was operating three years ago.
A year ago the Home Secretary turned down that wholly reasonable request. He spoke about the request in far less emollient terms a year ago than he did this evening. But, 348 days after I made that request, he has now acceded to it, in the nick of time for this debate. I am glad that it has been organised in the way that he described and I am glad that he referred to the preamble, which says
Accepting the continued need for legislation against terrorism".
We all accept that. The question is whether it has to be legislation that allows powers that are not those powers

that are common and proper in a democratic society. I hope that the noble Lord who is to institute and conduct such an inquiry will be able to look at whether there are alternative powers that meet the Home Secretary's needs but do not offend against the spirit and traditions of liberty in this country.

Mr. Alexander W. Lyon: How can Lord Jellicoe do that, in view of the terms of reference contained in the words read out by the Home Secretary? Surely, having made such a powerful case against the need for the Act, my right hon. Friend cannot continue to accept it merely because the Home Secretary has appointed some invigilator to look through the books simply to say that the powers are being carried out in the normal, routine way.

Mr. Hattersley: I am glad that at least my hon. Friend says that I have made out a powerful case against the Act. If I have, it is not least because of my feelings of repugnance, which grow stronger with the years The case that I have made out does not lead me to conclude that at the end of the debate, Lord Jellicoe or not, and whether or not there is a general reconsideration in the terms I have described, my right hon. and hon. Friends should vote for the continuation of this measure. For my part, I shall not vote for its continuation. I shall not vote for it to be repealed. I shall look forward with anxiety as well as eagerness to the conclusions of the Jellicoe report, and I shall look forward to examining them with the greatest care—but the most sceptical care. I do not propose to vote against the continuation of the Act tonight. It also means that I do not propose to vote for its continuation. I believe that the right course is for my right hon. and hon. Friends to abstain. That is what I intend to do, and my right hon. and hon. Friends on the Opposition Front Bench will do the same.

Mr. Eldon Griffiths: 1 wish to make only three points. First, I am deeply disturbed by the speech of the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley). He has had experience in Government and must know that in the prevention of terrorism much must rest on the judgment of the Home Secretary of the day and that there are matters that, with the best will in the world, it is impracticable and unwise for the Home Secretary to make fully public, even to the House.
Therefore, whether we like it or not, and I do not like it, we are driven to a question of trust. One issue that arises on the Act, as it has under previous Administrations, is whether the House is prepared to trust the Home Secretary of the day to administer the Act with a proper regard both to the civil liberties of the individual and, no less important, to the general security of the State. I believe that my right hon. Friend's record is one which can give the House full cause for trust in his judgment.
In failing to support the Act and in dodging into abstention, the right hon. Member for Sparkbrook has ducked the issue facing us. He has abdicated his responsibility and done no service to the cause of law and order which he so eloquently espoused at the beginning of his speech.
The Home Secretary is entitled to ask the House for its trust.

Mr. Robert Kilroy-Silk: And the House is entitled not to give it.

Mr. Griffiths: Indeed it is. I offer only my own view, and I am willing to give my right hon. Friend the Home Secretary my full trust.
Secondly, the House does not have all the evidence—nor do I—but the evidence that we have is to the effect that, on the whole, the Act has been a success. The figures quoted by the Home Secretary of the dramatically falling number of people who have had to be detained or to be subject to the powers in the Act is an eloquent demonstration that the Act has achieved, and is continuing to achieve, its purpose.
My third point relates to pre-emption. The right hon. Member for Sparkbrook courteously gave way to me, and I asked whether there could be justification for the security services acting to prevent a killing, bombing or maiming or an attack on the security of the State even though the information available to the services when they acted was not justiciable.
One of the problems that the House is bound to consider, if not to accept, is that there are numerous occasions, when the police are dealing with terrorists, when they must take action to prevent crimes from being committed—and perhaps to save innocent people from being blown up—before they can be certain that the information on which they are acting would suffice to convince a jury in a court.
Suggesting that we have a police State when the security services seek to prevent the destruction of innocent men, women and children and when, at the time that they must take action, they cannot be certain whether the evidence available to them would be sufficient to convince a jury, is tantamount to saying that the police should fail not only in their duty but under their discipline code. They have a duty to act to prevent a breach of the peace. They have a duty to act to prevent the State being subverted. If any police officer failed to act in those circumstances, he would be guilty, in my view, of a dereliction of duty and he would be rightly criticised in the House.
I believe that the Act, in practice, has provided the police and the security services with an unwelcome and disagreeable weapon that none of us would wish to have in a free society. There are, however, two measures of freedom. One is the freedom of the individual not to be arrested, not be detained and not to be charged unless he can be proved guilty. The other is the freedom of society at large to live in peace without threat to its existence. The balance between the two freedoms has had to be considered carefully by the House over the centuries.
The Act, in the end, is a mechanism that preserves the balance. It must be constantly reviewed and monitored. I welcome what my right hon. Friend says about the further review that is to take place. If, however, the right hon. Member for Sparkbrook is proposing, by his abstention, to duck the issue, to run away from the responsibility of saying "Yes" or "No" to the powers that the Home Secretary requires, he demonstrates—I say this having some affection and regard for the right hon. Gentleman—only his total unfitness to be Shadow Home Secretary.

Mr. William Ross: It is because this Act extends in large measure to Northern Ireland that I seek to give the view of my party and the people I

represent. No one has a better right to speak on the issue of terrorism than those who come from the part of the United Kingdom where my constituency is located.
There is a certain overlap between the Act, and the powers contained in it, and the similar Northern Ireland legislation. For that reason, I welcome most warmly the review that the Home Secretary has announced. Such a review can do nothing but good. Whenever the review takes place, the Home Secretary should consider fully the effectiveness of the Act in Northern Ireland and its present and future relationship to the Northern Ireland legislation.
The powers in section 12 are dissimilar to those that exist in the corresponding section of the Northern Ireland legislation. It is therefore not possible, I believe, to have a thorough review of the application of the Act in Northern Ireland without taking full cognisance of the Northern Ireland Act. I see that the Home Secretary signifies assent to my remarks. I hope that he realises that this may mean, at some point, legislative changes in relation not only to the Act under discussion but also in the corresponding Northern Ireland legislation.
The right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) referred to Government policy being an attempt to drive a wedge between the terrorist and the general population. I suggest that Government policy should not be to drive a wedge between the terrorist and the general population but to defeat the terrorist. There have been attempts for years to drive wedges but with little success. Yet the application of the Act—described in such harsh terms this evening—is alleged by the Home Secretary to have resulted in a great reduction in terrorist activity in this part of the United Kingdom. There has been no effort to drive a wedge here, but only a straightforward effort to defeat the terrorist. Surely that attitude should be carried to Northern Ireland with the same vigour.
The right hon. Member for Sparkbrook also talked about taking people on trust. The Home Secretary knows all about taking too much on trust in relation to terrorists. After all, he was Secretary of State for Northern Ireland. We recall clearly a number of terrorists being flown over for consultations precisely when two British Army officers wandered into the Bogside and were captured by the IRA. That is not the type of trust that we desire between Government, security forces and the terrorist.
There can be no trust when murderers are involved. People joining a terrorist organisation know that they are committing themselves to an organisation which is dedicated to murder and that the act of joining proclaims to the world that they are willing to commit such murders.
Methods of control over points of entry into the United Kingdom causes anxiety. I fly every week, as do my right hon. and hon. Friends. Sometimes we travel via Gatwick and sometimes via Heathrow. There is a difference in the security measures taken at the two airports. May we have a detailed rundown of the measures taken at all the major points of entry such as Liverpool and airports in the Midlands and Glasgow so that we can compare what happens there with what happens at the London airports? We hear disturbing reports about the different levels of interrogation at each airport. If certain measures are necessary at one airport, surely they are necessary at all points of entry, including sea ports.
We all view the application of the Act with distaste. I view with greater distaste the murders, the violence and the evil which make such an Act necessary. There is no point in bemoaning the law. We should be bemoaning the


actions that lead to the necessity for such laws. We should realise that only when we have conquered the terrorist—not only the terrorist in Ireland but the terrorist from further afield—can we safely throw such Acts into the dustbin where we all desire them to be.
I am sorry to have to refer to the right hon. Member for Sparkbrook so often, but I disagreed with much of what he said. He claims that the Act is a temporary measure. He referred to the slaughter in Birmingham and said that it was many years ago. It was this evening in Banbridge. It was this evening in mid-Ulster and it was yesterday elsewhere in Ulster.
For the life and soul of me, I cannot understand how people can say that just because the violence and murder in Great Britain has decreased, we should forget a measure whose application is for the protection and welfare of people throughout the Kingdom. The duty of the House is to protect all citizens of the nation, not only the citizens of Birmingham. Because of that, my right hon. and hon. Friends will support the order.
The terrorist seeks to overrule the ballot box and those who watched "Panorama" this evening saw the murderers walking free in the Irish Republic. They saw that those murderers—those violent men—have not forsaken their objectives.
Those who stand up and say that we should throw away a weapon which is so clearly needed are very foolish and put at risk not only lives in Ulster but lives that are protected by the Act here. I would prefer to see other protections such as a sealed land frontier, which would do more to defeat terrorism than anything else that has been talked about. I should like to see control of the movement of citizens of the Irish Republic wishing to come to the United Kingdom. However, we have been down that road before and we have been refused.
Perhaps the right hon. Gentleman will review the relationships between Britain and that foreign nation with which we share a land frontier, to see what can be done to control the movement of its citizens right across the board, right across the frontier and right across the sea.

Rev. Ian Paisley: I know that the Act that is before us tonight largely concerns hon. Members from Great Britain and not hon. Members from Northern Ireland. However, as Northern Ireland is involved in the legislation, I should like to make a couple of comments.
The right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) has said that he could well support the legislation if there were such happenings as took place in Birmingham some years ago. In Northern Ireland, those circumstances are continuing. There has been a bomb blitz right across Northern Ireland tonight, resulting in the death of a nine-year-old child in Banbridge. On the right hon. Gentleman's argument that if those things were happening the legislation would be necessary, I suggest that the legislation must stay on the statute book for Northern Ireland.
No representative of Northern Ireland could ask at this time that any weapon should be taken from the statute book. In this House in the past I have been fervent in my opposition to the removal of civil rights. I have opposed the whole system of internment and voted against that very issue. However, this House would be foolish if it thought that the threat from the Irish Republican Army was over.
Leading citizens of Northern Ireland and hon. Members of this House have recently been called to police stations and shown a list of prominent persons who will be murdered. Well to the top of that list was the Lord Chief Justice and a few days afterwards an attack was made upon him. Only the fact that his car was parked a yard further forward than it is usually parked prevented the Lord Chief Justice from being murdered. The terrorist was unable to get his gun in line with his intended victim.
Those are the matters that concern the people of Northern Ireland. While every review of the Act woud be welcome, it would only help terrorists' interests if the House tonight took this legislation off the statute book.

Mr. Robert Parry: Although I warmly welcome the announcement by the Secretary of State concerning the review of the Act, I rise to speak against the renewal order. At the end of the, debate I will go in the "No" Lobby again as I have clone in previous years.
When Mr. Roy Jenkins introduced the Act as Home Secretary, he said clearly that the Act was draconian and must be temporary. What are his views now? I sincerely hope that in the Glasgow by-election the Irish community in Glasgow will ask Mr. Jenkins whether he will oppose or support the repeal of the Act if he is elected to Parliament. It will be interesting to see whether the SDP Members vote against the order. I understand that some of the Liberal Members will be voting against it.

Sir John Biggs-Davison: Does the hon. Gentleman recall that the right hon. Member for Leeds, South (Mr. Rees), when he was Home Secretary in a previous Labour Administration, said that there could be no question of ending the legislation while Provisional IRA violence continued?

Mr. Parry: Many members of the Irish community in the United Kingdom feel that the Act is a recruiting sergeant for the IRA. There is a very strong feeling in that regard. I accept the hon. Member's point, but I am trying to emphasise that the Irish community in the United Kingdom feel very strongly about the continuance of the order. They feel that it is anti-Catholic in its operation. [Interruption.] Someone says that that is rubbish, but last year my hon. Friend the Member for Belfast, West (Mr. Fitt) made the same point that I am now making, and the Irish community in the United Kingdom support my argument.
The Home Secretary will recall that I wrote to him recently seeking a meeting with him on behalf of the Federation of Irish Societies. He rejected the application but said that he would meet hon. Members of this House to discuss the implications of the renewal of the order. I should like to ask the Home Secretary a specific question which has been raised with me by the federation. Can he name one case where a conviction for a terrorist type of offence has been obtained which could not have been obtained under legislation other than the Prevention of o Terrorism Act?
I hope that the Secretary of State will accept that the Federation of Irish Societies is a bona fide and very responsible organisation. In England, Scotland and Wales it is mainly responsible for social matters, for sporting activities, and for cultural, language and other matters


affecting the Irish community. When representatives of the federation met a number of Labour Members a few weeks ago, they made it clear that they, like my hon. Friends and myself, totally condemn and abhor violence or murder in any shape or form, from whatever source.
People refer to the infringement of civil liberties as being "one of those things". Is the House aware that, over the past seven or eight years, many thousands of people who have been detained and then cleared of any offence, still have their photographs, personal details and fingerprints on the police files? That is a gross infringement of civil liberties, and the Irish societies believe that the Act is used purely to collate information for the police so that it can be put on a police file or computer.
I have dealt with many cases on Merseyside of people who have been detained under the Act and later released. People who have been released as innocent feel unclean, they feel guilty, and they feel that their neighbours are pointing at them or looking at them as if they have been involved in some criminal activities. It has led in some cases to people losing their jobs. It has led to the breakdown of marriage. In one case it led to a man having a nervous breakdown. I understand that recently it led to an attempted suicide.
On those and other grounds, I shall be voting against the order.

Mr. Douglas Hogg: I normally listen to the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) with considerable interest, because he often makes a valuable contribution to our debates. I like to give plaudits where plaudits are due. However, on this occasion he has put himself in an impossible position. His position, broadly speaking, is as follows: the Act requires inquiring into—that was the position that he took last year—but that pending the inquiry he will sit on his backside and do nothing.
That is a difficult position for the right hon. Gentleman to justify. He made the point—one that it is important to understand—that the immediate justification of the Act when first introduced was the bombing at Birmingham and those elsewhere at that time. That terrible bombing was the justification for the Act. However, this Act applies to Northern Ireland, except for part I. No one can seriously argue that the situation in Northern Ireland today is less grave than was the situation in Birmingham in 1974. One has only to read the newspapers and listen to Northern Ireland Members to realise that Northern Ireland is in a state of anarchy much worse than we experienced in 1974. Yet, in 1974 and subsequently, the Labour Government thought it proper to bring in this legislation and thereafter to renew it. The position in Northern Ireland now is infinitely worse than it ever was in this part of the United Kingdom.

Mr. Bob Cryer: That is not helping.

Mr. Hogg: What the hon. Member for Keighley (Mr. Cryer) says shows the narrow mind that he often adopts on issues of this nature.
We were promised an inquiry by the Home Secretary. He was right to do that, but, pending the inquiry and its

results, it is extremely imprudent to suppose that this Act is not making a contribution to security, because in Northern Ireland, at least, the position borders on anarchy.
The Home Secretary did us a service when he reminded us about the bombing in this part of the United Kingdom during the latter part of last year. That, too, was a serious campaign against the security of the State and against our fellow citizens. To suppose that we could safely do away with this Act without awaiting the result of the inquiry is, I suggest, to commit an act of considerable imprudence. It surprises me that the right hon. Member for Sparkbrook should advocate such a course. That is unlike him, although it is very like the hon. Member for Keighley.

Mr. Edward Lyons: The Act poses a painful dilemma. On the one hand, all hon. Members want to prevent terrorism, which involves the indiscriminate killing of innocents. At the same time, the House has a tradition of supporting the principle of natural justice and wants to ensure that the legislation it passes is legislation of which we can all be proud and which conforms with the general principles of other legislation in this country.
Under the pressure of the terrible Birmingham pub bombings in 1974, a Government who were pledged to the rule of law and to natural justice none the less felt obliged to introduce this legislation. Because they were aware of its imperfections and knew that it contained things which offended the principles of natural justice, they said that the legislation should be of a temporary kind, and that the House should decide—first, at six-monthly intervals, but in 1976 at annual intervals—whether the legislation should continue. Given that there are provisions in the Act that we should normally abhor, that is quite right.
There is a dilemma. We wish to protect our people from outrage, yet we also wish to conform to the rule of law. Last year, my hon. Friend the Member for Hayes and Harlington (Mr. Sandelson) sought, in common with members of the Official Opposition to obtain the assurance of an inquiry. When an Act damages the safeguard of habeas corpus, confers powers on the Executive to remove United Kingdom citizens from the United Kingdom and inhibits the movement of United Kingdom citizens from one part of the country to another, it is only right that there should be a stringent review and inquiry into the way in which it works. We can then see whether it can be replaced and, if not, whether—without prejudice to the security of those in the United Kingdom—provisions could be incorporated in the Act so that it conforms with the rules of natural justice as we understand them.
Therefore, we applaud the decision to carry out a review. As the Home Secretary has promised a review, what should we do? Clearly, we do not want to do anything that will prejudge it or damage the House's right to deal sensibly with any report or recommendations. Therefore, it would not be appropriate to oppose the order. If the Social Democratic Party had understood—[Interruption]—that the official Opposition were going to oppose the extension—which it is not—it would—given the promise of a review—have mustered its forces to support that extension. That is our position.

Mr. Reginald Freeson: For the Government and anybody who wishes to support the


extension of the Act, the main purpose of the debate must be to provide the evidence and arguments in favour of continuing such a temporary provision. The onus of argument should rest not upon those of us who oppose the Act but on those who wish to continue it.
I make it clear from the outset—as I did last year—that I oppose and shall vote against the continuation of the Act. Even on the question of an inquiry, the Government have not given us a satisfactory response. Let us ignore the fact that it has taken 12 months for the Home Secretary to agree to something, in general at least, put to him last year, when he rejected it. Let us ignore the fact that during the 12 months since then nothing special has occurred to make him change his mind. Let us set aside that he should have accepted the proposition last year and let us merely consider his proposals. We shall have to study tomorrow's edition of Hansard carefully, but the right hon. Gentleman seemed to make it clear that the review will not consider whether the Act should continue, but will merely monitor the Act's administration. Even if I were decided in my own mind to oppose the continuation of the Act, and even if I wished to concentrate on the review and whether such a proposition should decide one whether to support the continuation of the Act, oppose its continuation or abstain, I should find the proposition that has been put to the House highly unsatisfactory.
It is not sufficient to put to the House a proposal to monitor the administration of the Act. The issue, even in the context of an inquiry, is whether the Act should be continued and whether there are matters being dealt with under the Act of the sort that the Home Secretary illustrated during his remarks that could equally, if not more effectively, be dealt with under other powers.
The Act was introduced in 1974, and not 1969 when terrorism broke out again, under the pressure of the terrible events in Birmingham, the special situation, the special mood and the special threats. There were threats from the terrorists and the threats of those who wished to take action against the community to which the terrorists belonged.

Mr. Eric Ogden: Are we not in danger of regarding what is unacceptable in Birmingham as acceptable in Northern Ireland and regarding what is unacceptable over there as acceptable here? There is a danger that we are trying to divide the United Kingdom so that something that is regarded as normal over there is given a few column inches in the press whereas if the same thing takes place in Birmingham, Chelmsford, Enfield or Liverpool we have to have an Act. Surely that is a disgraceful state of affairs.

Mr. Freeson: I do not accept a word of the hon. Gentleman's intervention. That is not the burden of the argument. We did not require an Act between 1969 and 1974 to conduct the campaign against terrorism in Northern Ireland or inside the rest of the United Kingdom. I understand the feelings that emerge when we debate these matters, but we are not discussing whether we should be soft on terrorism or hard on terrorism. Whatever labels are attached to the so-called nationalists in Northern Ireland and elsewhere, they are the other face of violent Fascism. That is true whatever political labels they attach to themselves and whatever theorising some may indulge in politically. We should oppose them as strongly as we can.
I do not believe that the continuation of the Act assists us and it rests upon the Government, whichever party is

in Government, to prove the case. The onus is on them and the Government are signally not proving their case. What is more, they are making it pretty clear, if I heard the Home Secretary aright, that the so-called inquiry is to be not a review of the desirability, the practicability or the necessity of the Act but a monitoring exercise. It is clear that it will not concern itself with the fundamental issue whether the Act should remain on the statute book.
I may be wrong and misjudging the situation, but one of the causes—perhaps the main one—for the sharp decline in detentions and arrests under the Act during the past year was the very nature of the debate that took place in the House last year—[HON. MEMBERS: "Oh".] I am entitled to express that rather modest view as other Members have claimed in highly emotive terms that it is vital to retain the Act, which is a direct infringement of civil liberties, for the purpose of combating terrorism.
We have not had evidence to support that. Year after year we have failed to receive the evidence and the Home Secretary should be able to establish whether the son: of example that he has quoted—others could have been quoted of a lesser nature—in his speech could have been acted upon only under the powers provided by this Act. He signally failed to do so and I do not believe that he could establish it. There are other powers. That comment is as applicable to the Home Secretary's speech as it is to the speech of my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley).
The House must decide whether it wishes to see continuing on the statute book in an attack on terrorism—without evidence to support the case that is an essential weapon against terrorism—an Act which provides for arrest and search without warrant, for the refusal of access to legal or other advisers, family or friends, forcible fingerprinting and photographing of arrested persons, no knowledge given to the detained person of why the arrest was made, the possible risk of false confessions and false information being used for purposes of arrest and detention, the stress and tension that leads to further false statements and the abolition of the right of silence. One could go on to deal with other aspects of the legislation.
No one in the House can easily accept such legislation unless there is overwhelming evidence that the Act is required in order to combat terrorism. No one, certainly not the Home Secretary, has yet adduced that evidence. What we are seeing is temporary legislation turning into permanent legislation. The case for continuing the Act must be argued here, not in secrecy or privacy. Year after year we are moving further away from such open Government and open legislation, which we should be proud to protect in the House.
We have not had the evidence. The House should reject the continuation of this legislation not in order to go soft on terrorism but because the Act has not been proved necessary to combat terrorism and it is a deep affront to the civil liberties of hundreds of thousands of people. It should not be mocked or laughed at, but should be argued seriously, especially by the Government Front Bench.

Mr. Gerard Fitt: As I watched the "Panorama" programme this evening, followed by the news of the terrible bombings in Northern Ireland, I must admit that even my resolve and my opposition to the Act almost became seriously weakened. For a few moments,


I could see myself not going into the Lobby to vote against this legislation. But then I recognised that that is exactly what the IRA would have wished me to do.
Why was that programme put out tonight? It was because it had been advertised and the IRA knew well what it would contain. It involved a number of men and women, so-called soldiers—I regard them as cowards, the scum of the Irish nation—who from the safety of the Republic openly boasted of the terrible deeds that they had committed in their own country. It was well known all last week and the week before that we were to debate the renewal of the Prevention of Terrorism Act tonight.
I do not know the working of the terrorist mind, nor do I particularly want to, but there is no doubt in my mind that the terrorist activities in Northern Ireland tonight were deliberately carried out because it was known that we would be debating this subject tonight. The IRA does not want the Act taken off the statute book, but thousands upon thousands of decent Irish men and women living in Scotland, England and Wales bitterly resent the fact that, whether it is intended or not, the Act points the finger of suspicion at them. The IRA lives and thrives on legislation of this kind. It is ordinary, decent people who are affected by it.
There are Members of the House who honestly believe that the Prevention of Terrorism Act has prevented acts of terrorism. That is an opinion honestly held, but there are others such as I, who have lived all my life in the shadow of repressive legislation, who believe that it has not led to any diminution of terrorism.
Let us follow the logic of the argument. The Special Powers Act existed from the creation of Northern Ireland until it was abolished in 1972. Yet that Act, regressive as it was, and draconian as this legislation is, did not prevent terrorism from occurring in Northern Ireland. Too many innocent people are affected by this legislation.
There is also the argument about the police being able to take preventive action. I do not subscribe to that at all. We are being asked to take too much on trust. I, too, talk to policemen. It is necessary for me to do so. Many of them say, as the Home Secretary says, that they cannot tell me the reasons for having to take a certain action. On the argument of prevention, it would be perfectly easy to come to the Dispatch Box and initiate a Prevention of Mugging (Temporary Provisions) Bill and then arrest anyone suspected of that offence—the figures for mugging in Northern Ireland are far worse than they ever have been for terrorism.
I particularly resent this legislation because of the exclusion orders that have been promulgated. I am convinced—again, one can only use one's intelligence, and I have a reputation for being opposed to the men of violence—that utterly innocent people have been excluded from this part of the United Kingdom without their having been involved in any action or support for terrorist organisations.
When I tried to seek information from any source about why they were excluded, I was told by the police and by the Home Secretary that they had the information justifying it but that they could not give it to me. I honestly do not believe that the Home Secretary, as I have said in debate after debate in the House, has gone into every case where an exclusion order has been granted. The police carry out the inquiries and, whatever their reasons may

be—their motivation can sometimes be seriously at fault—they make recommendations to the Home Secretary, and he signs exclusion orders. If there is to be an inquiry, serious attention should be given to this one part of the Act.
I am not advocating any extension of the terms and provisions of this Act, but I support the remarks made by my right hon. and hon. Friends on the Front Bench. Within recent weeks in Northern Ireland—certainly within recent weeks in Northern Ireland—certainly within recent months—many cases have been brought before the courts which give rise to serious suspicion that there has been collusion between the UDA, a Protestant extremist organisation, and the IRA. A case is now being heard in Northern Ireland in which a policeman is being tried for the killing of a colleague. We are also told that there have been acts of collusion between police forces within Northern Ireland and members of terrorist organisations.

Mr. Eldon Griffiths: Does the hon. Gentleman believe that?

Mr. Fitt: This was evidence given in the courts and it has not been contradicted so far. I am not a jury man, but perhaps those cases have not been adequately reported in the United Kingdom—

Mr. William Ross: On a point of order, Mr. Deputy Speaker. The hon. Member for Belfast, West (Mr. Fitt) has referred to a case in which a member of the RUC is accused of killing a fellow member. If my information is correct, that case is not yet finished but is presently before the courts.

Mr. Fitt: I am not passing any opinion. If the hon. Member for Londonderry (Mr. Ross) wants a case in which the evidence has been concluded, I can give this example: three of four UDA men, members of a Protestant paramilitary organisation, were sentenced to terms of imprisonment only last week for the murder of councillor John Tunnley. As soon as the case reached its concluding stages, a defendant said that he had been acting in collusion with the security forces. That gives me cause for concern.
In the final analysis it is this House and not the Secretary of State for Northern Ireland that can either allay the suspicions or do something to ease the tension that now exists in Northern Ireland.
It is right that everyone in the House should express regrets and sorrow to all those injured in Belfast tonight. Although we go into the Lobby to vote against the renewal or retention of this legislation, it must not be thought that we in any way support terrorism. The ordinary law in this country is sufficient to apprehend any terrorist in the United Kingdom. The retention of this Act on the statute book tonight and, indeed, the next time it comes up for renewal, is exactly what the IRA wants and that is what I want to deny it.

Mr. Whitelaw: I have only a few minutes before the time expires. I say first to the hon. Member for Belfast, West (Mr. Fitt) that I am sure everyone in the House—as the hon. Member for Londonderry (Mr. Ross) and the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) said, deeply regrets the bombings that occurred in Northern Ireland tonight. The hon. Member for Belfast, West knows very well from me that his record of being


against terrorism is absolutely unchallenged and nobody would seek to challenge it in any way. That does not mean that one necessarily agrees with the conclusions he draws and I am bound to say that I do not.
I am grateful to the many hon. Gentlemen who thought it right that there should be a review of this Act, as I announced, by Lord Jellicoe. I am grateful to the right hon. Member for Sparkbrook for saying that that course was right.
The right hon. Member for Brent, East (Mr. Freeson) said that he does not believe in such a review, is against the Act altogether and that nothing special has happened since last year when it was reviewed. I should have thought that the bombings that took place before Christmas—including the bombing of Sir Steuart Pringle's car, were something fairly special in the United Kingdom. To write them off as nothing very special is somewhat surprising. I cannot accept that assertion.
I understand the decision of the right hon. Member for Sparkbrook to sit on the fence. I also understand the decision of the hon. and learned Member for Bradford, West (Mr. Lyons) to sit on the fence. If the hon. and learned Gentleman sits on the fence on many more issues, the whole thing will collapse and he will have to make up his mind one way or the other, but so long as he can put that day off, he will no doubt wish to do so. It will not be for very long, because the fence is becoming extremely rickety. I have heard the hon. and learned Gentleman make so many speeches when he has sat on it that it seems almost to have gone for ever. He will therefore have to decide.
I am grateful to my hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths) for what he said. There is bound to be an element of trust in the Home Secretary when deciding these matters. To those who doubt that, I can only say that all my predecessors since the Act was passed, including those in the Labour Party, have decided that it was right to have this Act and these powers and that they were necessary to combat terrorism.
My experience in the last year, including the bombings before Christmas, has proved that that is still the case. I have promised the review that was asked for last year. I believe that to be right. On that basis I hope that the House will renew the Act tonight.

Question put,

The House divided: Ayes 138, Noes 53.

Division No. 91]
[12.35 am


AYES


Alexander, Richard
Butcher, John


Aspinwall, Jack
Cadbury, Jocelyn


Banks, Robert
Carlisle, John (LutonWest)


Beaumont-Dark, Anthony
Carlisle, Kenneth(Lincoln)


Benyon, Thomas(A'don)
Carlisle, Rt Hon M. (R'c'n)


Benyon, W. (Buckingham)
Clarke, Kenneth (Rushcliffe)


Berry, HonAnthony
Clegg, Sir Walter


Bevan.DavidGilroy
Cope, John


Biggs-Davison, SirJohn
Costain, SirAlbert


Blackburn, John
Cranborne, Viscount


Bottomley, Peter(W'wichW)
Cunningham, G.(IslingtonS)


Boyson, Dr Rhodes
Dorrell, Stephen


Bright, Graham
Douglas-Hamilton, LordJ.


Brinton.Tim
Dover, Denshore


Brooke, HonPeter
Dunn, Robert(Dartford)


Brown, Michael(Brigg&amp;Sc'n>
Eyre, Reginald


Bruce-Gardyne, John
Fairgrieve, SirRussell


Bryan, Sir Paul
Faith, MrsSheila


Buck, Antony
Garel-Jones, Tristan


Budgen, Nick
Goodlad, Alastair


Bulmer, Esmond
Gorst, John





Griffiths, PeterPortsm'thN)
Paisley, Rev Ian


Gummer, JohnSelwyn
Patten, Christopher(Bath)


Hannam, John
Patten, John(Oxford)


Hawkins, Paul
Powell, Rt Hon J.E. (S Down)


Hawksley, Warren
Prior, Rt Hon James


Heddle, John
Proctor, K. Harvey


Hogg, HonDouglas(Gr'th'm)
Pym, Rt Hon Francis


Hunt, Jobn(Ravensbourne)
Rhodes James, Robert


Hurd, Rt Hon Douglas
Roberts, M. (Cardiff NW)


JohnsonSmith, Geoffrey
Robinson, P. (BelfastE)


Jopling, RtHon Michael
Ross, Wm. (Londonderry)


Kimball, SirMarcus
Sainsbury.HonTimothy


Lang, Ian
Shaw, Giles (Pudsey)


Lawrence, Ivan
Shaw, Michael(Scarborough)


Lee, John
Shelton, William(Streatham)


LeMarchant, Spencer
Shepherd, Colin(Hereford)


Lester, Jim(Beeston)
Silvester, Fred


Lloyd, Ian(Havant&amp; W'loo)
Sims, Roger


Lloyd, Peter(Fareham)
Smyth, Rev. W. M.(Belfast S)


Lyell, Nicholas
Speller, Tony


McCrindle, Robert
Spicer, Jim(WestDorset)


Macfarlane, Neil
Spicer, Michael(S Worcs)


MacGregor, John
Stainton, Keith


McNair-Wilson, M.(N'bury)
Stanbrook.lvor


McNally, Thomas
Stanley, John


McQuarrie, Albert
Steen, Anthony


Major, John
Stevens, Martin


Marland, Paul
Stewart, A.(ERenfrewshire)


Marlow.Antony
StradlingThomas, J.


Mates, Michael
Tapsell, Peter


Mather, Carol
Taylor, Teddy (S'endE)


Mayhew, Patrick
Temple-Morris, Peter


Mellor, David
Thomas, Rt Hon Peter


Meyer, Sir Anthony
Thompson, Donald


Miller, Hal(B'grove)
Thorne, Neil(IlfordSouth)


Mills, Iain(Meriden)
Vaughan, DrGerard


Mitchell, R.C.(Soton Itchen)
Waddington, David


Moate, Roger
Waller, Gary


Molyneaux, James
Ward, John


Mudd, David
Watson, John


Murphy, Christopher
Wells, Bowen


Myles, David
Wheeler, John


Neale, Gerrard
Whitelaw, RtHonWilliam


Needham, Richard
Wickenden, Keith


Nelson, Anthony
Wilkinson, John


Normanton, Tom
Wolfson, Mark


Ogden, Eric



Onslow, Cranley
Tellers for the Ayes:


Osborn, John
Mr. David Hunt and


Page, Richard (SW Herts)
Mr. Robert Boscawen.




NOES


Allaun, Frank
Lyon, Alexander(York)


Ashton, Joe
McGuire, Michael(Ince)


Atkinson, N.(H'gey, )
Marshall, D(G'gowS'ton)


Benn, Rt Hon Tony
Marshall, Jim (LeicesterS)


Bidwell, Sydney
Maxton, John


Brown, Ron(E'burgh, Leith)
Maynard, MissJoan


Callaghan, Jim (Midd't'n&amp; P)
Meacher, Michael


Campbell-Savours, Dale
Mikardo, Ian


Canavan, Dennis
Mitchell, Austin(Grimsby)


Cox, T.(W'dsw'th, Toot'g)
Newens, Stanley


Cryer, Bob
O'Halloran, Michael


Deakins, Eric
Parry, Robert


Dubs, Alfred
Pavitt, Laurie


Duffy, A. E. P.
Price, C. (Lewisham W)


Eastham, Ken
Race, Reg


Fitt, Gerard
Richardson, Jo


Fletcher, Ted(Darlington)
Roberts, Allan(Bootle)


Foulkes, George
Roberts, Ernest (Hackney N)


Freeson, RtHon Reginald
Ross, Ernest (Dundee West)


Hogg, N.(EDunb't'nshire)
Skinner, Dennis


Holland, S.(L'b'th, Vauxh'll)
Soley, Clive


Homewood, William
Stallard, A. W.


Huckfield.Les
Thomas, Dafydd (Merioneth)


Kerr, Russell
Thorne, Stan (PrestonSouth)


Kilroy-Silk, Robert
Wigley.Dafydd


Lamond, James
Wilson, William (C'trySE)






Winnick, David
Mr. Andrew F. Bennett and



Mr. Martin Flannery.


Tellers for the Noes:



Question accordingly agreed to.

Resolved, 
That the draft Prevention of Terrorism (Temporary Provisions) Act 1976 (Continuance) Order 1982, which was laid before this House on 24 February, be approved.

RESERVE FORCES BILL [LORDS]:

Order for Second Reading read.

Motion made, and Question put forthwith, pursuant to Standing Order, No. 66 (Second Reading Committees),
That the Bill be now read a Second time.

Question agreed to.

Bill accordingly read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

STATUTORY INSTRUMENTS, &c.

Motion made, and Question put forthwith to Standing Order No. 73A(5) (Standing Committee on Statutory Instruments &amp;c.)

CONSUMER PROTECTION

That the draft Filament Lamps for Vehicles (Safety) Regulations 1982, which were laid before this House on 10 February, be approved.—[Mr. Lang.]

Question agreed to.

Orders of the Day — Education (Hereford and Worcester)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Lang.]

Mr. Colin Shepherd: I am very grateful to my hon. Friend the Under-Secretary of State for Education and Science, the Member for Brent, North (Dr. Boyson), for coming to the House this evening to answer a debate on what is an important matter for us in the county of Hereford and Worcester. The importance of this matter is underlined by the fact that my hon. Friends the Members for Leominster (Mr. Temple-Morris), Worcestershire, South (Mr. Spicer) and Bromsgrove and Redditch (Mr. Miller) are present. In addition, I have a message from the Minister of Agriculture, Fisheries and Food, my right hon. Friend the Member for Worcester (Mr. Walker), who sends word from Brussels, where he is busy on ministerial negotiations on the agricultural price review, that he wants to be kept informed as to what is happening and is watching very closely the position of education in the county.
It is probably an understatement to say that parents and many others in the county are shocked and confused at what has taken place over the past few weeks about the prospects for education in our county. It is right that parents should be concerned for the quality of the education that their offspring will receive. It is important that there should be the fullest possible understanding of decisions taken by the county council and the reasons for them. It is also important that parents should be reassured that the thrust of education policy is towards the maintenance and development of the quality of their children's education.
Parents are confused because at the same time as they are told by the local newspapers that the number of teachers is to drop by 200, over and above the reduction of many more through falling rolls, that music tuition is to go by the board, that the provision of hot school meals in the primary schools is to end and that school allowances for books and equipment will not be increased to take account of inflation, they are also told that the country rate will be going up by 16·4 per cent.
I have scanned the local press to try to find out what is happening. If that were all that I had to go on as a parent with a child at a primary school in the constituency I should be as confused and angry as my constituents. The local evening paper, in a rare page one editorial comment on 12 February, summed up the position succinctly:
Will someone … please stand up and tell the poor bemused public what on earth is going on?
People are fed up to the hind teeth with the term 'government spending cuts.' Neither do they want woolly explanations wrapped up in statistics they don't understand.
They want simple answers to simple questions.
WHY, if it's all the fault of the government, is every education authority in Britain not in the same boat?
WHY has the county education committee been allowed to overspend its budget in the past?
WHY was the present crisis not foreseen and the public alerted long before now?
The ratepayers suspect the worst. They suspect that there is an excessively high ratio of administrators to teachers. They suspect that councillors have been hiding their heads in the sand, hoping that the evil day would never come. They suspect that bureaucracy has got the upper hand.
They suspect these things because councillors have not explained in a simple and straightforward manner why the present situation has arisen.


That is good fighting stuff. Those may not be the right questions to ask, but they provide a starting point.
In fairness to councillors, I must point out that a little privileged research makes it clear that the answers are not simple and are certainly not straightforward to explain. Despite the earnest endeavours of councillors, the questions posed by the evening paper are no nearer being answered, though the statement of the county councillor for Ross-on-Wye, Miss Anthea McIntyre, published in the Ross Gazette, deserves a wider circulation.
What becomes apparent as the ogre of the piece is the £2½ million that the county council was told as late as 19 January was required to be paid into the advanced and further education pool, over and above what had been anticipated by the council when it drew up its budget in December. The county council tells me that the extra impost came as a massive shock. Indeed, I have it on good authority that the county treasurer turned an indelicate shade of green. Having tried to find out what happened, I have considerable sympathy for him.
It seems that the county council began to become aware in early December that Government decisions were being taken which would have implications for the advanced and further education pool distribution and the rate support grant settlement. It must be borne in mind that the county council estimates were to be completed by 15 December.
The first sign that something extra might be required came on 17 December as the result of a letter from the Association of County Councils concerning a meeting the day before between ACC representatives and my right hon. Friend the Secretary of State for Education and Science to discuss proposals for
Local Authority expenditure on Education—including Advanced and Further Education pool and tuition fees—and the contraction and quality of the teaching force".
The county council can perhaps be forgiven for not being too perturbed at that time, since, as a net payer to the advanced and further education pool, it could have expected a reduced contribution being required for a reducing pool. When the Secretary of State announced details of the Government's education expenditure plans for 1982–83, including the quantum for the advanced and further education pool, he was not able to say how they would affect individual authorities.
Another spanner in the works at that time was the late announcement of the rate support grant. It is worth noting that the county council had to go to Birmingham to collect the rate support grant notification from the regional office of the Department of the Environment, so as not to lose time. I appreciate that this is not my hon. Friend's responsibility but it is a facet that has to be borne in mind.
The actual notification in detail of DES pooling, with its full financial implication set out, was not received by the county council until 19 January, nearly a full calendar month later. It is true that it was dated 12 January. Unfortunately, the envelope, with its postmark was not retained. Suffice to say that this major bolt did not strike county council consciousness until 19 January. It showed a major change in the method of advanced and further education pool distribution and a change in tuition fee policy with a major knock-on effect.
The complexity of the interaction of this with the rate support grant is charmingly and drily understated by the county treasurer in the opening words of a memorandum that he wrote for the chairman, stating that

the effect of the rate support grant and the council's grant related expenditure is very difficult to follow through".
Having tried to follow the correspondence through, I agree heartily with him.
My confidence in the basic fairness of the way in which the sums have been calculated is undermined by the admission of DES officials at a meeting with officers of the county council on 29 January. The report of the officers said
that the resultant distribution for 1982–83 was to some extent arbitrary due to various assumptions on date source and the method of splitting advanced further education and non-advanced further education expenditure in the historic base year 1980–81.
At this meeting and another on 27 January at Worcester, it was confirmed by DES officials that it would not have been possible for the county council to have been aware of the detailed figures until notified by the DES. The important thing is that this lack of time made it extremely difficult for the county council to take a proper, cool and measured approach to its budget for 1982–83.
I have dwelt perhaps for longer than I should have done on the problems arising from the AFE pool but I shall look forward to what my hon. Friend has to say about the matter. The side-effects are such as to worry parents who cannot be blamed for their concern when they read letters in the local press indicating that the county's education is apparently below average in various league tables. It is just possible that those who quote such statistics are doing so not for the proper enlightenment of parents but rather to score political points and exacerbate the agonies of a sorely pressed education authority.
It is not sufficient to quote selectively from various tables and to say, for example, that pupil-teacher ratios in primary schools in the county rate 80th out of 97 for all English counties without saying that they are 6·5 per cent. above the average for English shire counties—a measure of comparison far more meaningful because of the comparable nature and number of schools. Nor is it sufficient to say in respect of secondary schools that the ratio lies 74th out of 97 when the average is 4·7 per cent. better than the average for English shire counties.
I distrust this league table approach to comparison because of the opening it gives to selective quotation and the consequent confusion that it can cause. All the tables should be visible to enable a proper swings versus roundabouts comparison to be made.
What I found interesting when I studied comparable expenditure on education—primary, secondary and further—was that Hereford and Worcester county council's net cost per resident was almost exactly the same as the average for the English shire counties at £180·87. I should like to question whether spending in itself is a valid criterion for comparison. If the spending of the county council on secondary education is 5·7 per cent. less than the average for the shire counties but the results are up to the mark, it is perhaps the case that the county council is providing better value for money than higher spending authorities.
The real purpose of raising this matter tonight is to try to get simple answers to questions that perhaps are not so simple, to draw the attention of Government Departments to the problems that can and do arise when major decisions are made with little time for their implementation, to show the consequence in terms of people understanding what is happening to them and why, and the concomitant erosion of trust and confidence for the future of their children.
I posed earlier the questions asked by the Evening News. The other questions reasonably being asked are as follows. What is the basis of this enormous extra sum to be contributed? Why could not it have been foreseen? Why was it not possible to know how much it was until 19 January? Why could not the authority accommodate the extra when the increase in rates of 16·4 per cent., with its dire consequences for industry and commerce, is far beyond the increase in resources of most ratepayers? Above all, bearing in mind the trauma that that has caused and the element of arbitrariness admitted by the Department, what safeguard have we that this cannot happen again?

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Mr. Hal Miller: I should like to add to what my hon. Friend the Member for Hereford (Mr. Shepherd) has said about the puzzlement of parents, particularly about music, the provision of schools and the closure of rural schools. Because of the lateness of the decision, the county education committee was forced to take a rough and broad brush approach. It has had to contemplate abandoning the provision of instrumental tuition.
It is all very well to say that orchestras can continue, but, if children cannot be given the instrumental tuition, it is not easy to see how a school orchestra can function. In that context I ask the Minister whether there is any prospect of reversing the High Court decision of last year, involving the constituency of my hon. Friend the Member for Worcestershire, South (Mr. Spicer) and a mischievous plaint. In my experience, most parents are happy to contribute to individual intrumental tuition.
The other issue involves the provision of school places. Because there is such a vast and rapidly growing population in my area, in the north-east of the county, we have lagged behind in every type of provision with disastrous effects in the less populated areas. That has included the closure of rural schools, even though they are above the target levels for keeping schools open. My hon. Friends will know what a deprivation that is to rural life.
For those reasons, and for the amplification of the arguments adduced by my hon. Friend, we seek the Minister's help in establishing the facts so that the public may have a proper explanation. When I took a delegation from the county council to see the Minister responsible for further education, we asked whether the incidence of the changes in the arrangements for the pool could be phased to mitigate some of the immediately adverse effects.

The Under-Secretary of State for Education and Science (Dr. Rhodes Boyson): I appreciate the concern which is shown by the presence of so many hon. Members from Worcestershire and Hereford in the Chamber this morning. I have been privileged to speak twice in the constituency of my hon. Friend the Member for Hereford (Mr. Shepherd) and I have stayed with his wife and himself there. I know how well he serves that large constituency and of the high respect in which he is held by all his constituents.
There is no doubt that there is a problem for the education authority and the local authority about the possible overspending from last year. There are three

financial problems. First, a deficit of about £1 million has had to be carried over from last year. That has to be put on this year's accounts, either through the rate support grant or the rates. Secondly, the authority did not receive what it expected from the balance on the pool. Thirdly, the change in the way in which the pool has been arranged this year meant that there was a volume cut of about £3½ million in the money going to the authority.
The change in the arrangement was made with the education authority's agreement. The pool is not easy to understand. It is rather like the Schleswig-Holstein case—one person is dead, one is forgotten and the other is mad. I do not wish to weary the House with the problems of the pool. Historically, the pool gave back to the people what they spent. I am sure that my hon. Friends, as good Conservatives and in self-help, will realise that that is not the best way of ensuring that one gets value for money. Ever since the Government came to power we have been concerned to introduce an arrangement whereby the high spending authorities were not automatically paid back but where, over a number of years of phasing, money was paid per course. The building may differ in cost, but the cost of the courses and the staffing should be more or less equivalent in any place. The same course in one authority, or one institution, could be almost twice as much per pupil as in another.
Worcester College of Higher Education's problem is that it is one the highest spending colleges in Britain. The very fact that the pool has now been checked—again, I would say, in self-defence this evening, with the agreement of the local education authority—meant that it has not received what it expected to receive based on previous years. A penalty clause has been built in because of the high spending of the college. In the long run, that is something my hon. Friend would agree with. It is most difficult this year because it is the first year in which the penalty clause for the level of spending has been applied.
The cut on money going this year into the pool throughout the country has averaged about 9 per cent. The economical authority has had a 2 per cent. cut. The most expensive authority has had a 15 per cent. cut. Hereford, almost the most expensive authority, has had a 13 per cent. cut. Therefore, compared with two years ago, there has been a 13 per cent. cut in the money that has come into Hereford's pool, compared with an average cut of 9 per cent. and a cut to certain authorities of 2 per cent. When one deals with the huge budget of these colleges of higher education, one can see that that is a large sum.

Mr. Shepherd: Is there any specific visible reason for Worcester College of Further Education's costs being higher than they might otherwise be?

Dr. Boyson: The only visible cost is on pay cheques. The average income per head of the lecturing staff is much higher there than in most other authorities. This is at the authority's discretion. It is one of the most expensive authorities because of staff-student ratios and—I think the phrase is—"contact hours" in the classrooms. Those costs will have to be watched by that authority and brought into a closer relationship with average costs in Britain.
It is a matter of paramount importance that lecturers—and teachers generally, because their salaries are being negotiated at the present time—should accept pay settlements within reasonable limits. A county such as Hereford and Worcester has enough difficulty in balancing


its books in relation to the Government's properly modest pay assumptions. Lecturers and teachers there and everywhere else in Britain must understand that a higher settlement will only mean more jobs not being filled, more reductions in services, or, alternatively, an increase in the rates.
My hon. Friend referred to when the local authority learnt of the money it was due to receive this year. The general statement was made by the Secretary of State on 21 January. He said that the size of the 1982–83 pool implied substantial economies, and that
With the agreement of the local authority associations, the principles underlying the distribution of the quantum for 1982–83 should reflect the judgment that the major point of securing the necessary overall economies should fall on the institutions with the highest unit costs.
I shall not argue with my hon. Friend as to when the letter should have been sent or why it took seven days in the post, but I would at least say, in defence of the Secretary of State, that the statement was perfectly clear. Authorities such as Hereford and Worcester, which knew that they were spending more than other authorities, must have been aware, when they received the letter, that there would be a penalty clause. They would not know how much the penalty would be, but they should have been warned of what was being done.
My hon. Friend asked about the visible difference. I am sure that the authority is aware of the problems arising from what is called grade drift. I recognise that that is a terrible phrase. Once people are on a grade they are there, and as time goes on they become more expensive. I hope that my hon. Friends will be able to think of a better phrase than "grade drift" when they are explaining the matter to the populace of Hereford and Worcester.
I repeat that the statement should have been seen as a clear warning that the advanced further education college, unlike most of the rest of the authority's education service, was doing the equivalent of spending well above GRE. The share that is going on advanced further education is well above the GRE. Elsewhere, up to now, the authority has spent below the GRE. This year it is spending the GRE, but a lot of it is going unfairly, compared with the rest of the education services in Hereford and Worcester, to advanced further education there.
Whether the expenditure is reduced by doing something about grade drift or by tightening the staff/student ratios, or anything else, is the authority's business, but there should be scope for something to be done along those lines.
I should now like to make one or two general points. The authority also suffered this year on the increase of the grant-related expenditure. All over the country the increase was 8·9 per cent., but the increase in Hereford and Worcester was 8·4 per cent. That was a 0·5 per cent. lower increase of GRE than the average for the country. When an authority has an expenditure of £130 million, a mere difference of 0·5 per cent. represents a considerable sum—well over £1 million. Problems are bound to arise in an authority that is working on that basis.
The LEA this year is trying to spend up to its grant-related expenditure on education in 1982–83. As we all know, it represents the Government's broad assessment of what the authority needs to spend to provide a level of service in line with the Government's expenditure plans.
Within the total of £130 million, I understand that the authority must cover any deficit inherited from the previous year.

Mr. Michael Spicer: Will the Minister be able to say something in response to the point raised by my hon. Friend the Member for Bromsgrove and Redditch (Mr. Miller) concerning musical instruments and private contributions?

Dr. Boyson: I certainly will. I know that my hon. Friend the Member for Worcestershire, South (Mr. Spicer) is concerned about it. I remember that he was sitting on the Bench behind me when we debated the matter about a year ago.
The authority could have responded by spending above its GRE and sending rates through the roof. Fortunately, the ratepayers of Hereford and Worcester are so well served by their Members of Parliament that the authority chose not to do so. The authority's precept will be increased by 16½ per cent., as has already been said. That is below the average for shire counties and little more than half the average increase for Labour-controlled shires, where the figure is now about 31 per cent. Therefore, in that respect I should like to congratulate the authority on its control of expenditure, despite the intense problems being faced by it.
The decision last year concerning music was, to say the least, an unfortunate one. In my school days in a grammar school in Lancashire it was always presumed that for woodwork, for domestic science, for individual music tuition and for games coaches, money was put into the till or a local canteen was run. In some way or other, extra money was put in. It went on all over the country. One of the most expensive items to be paid for was individual music tuition. It is often a nuisance on the timetable, and it is a costly item. Then last year, as a result of this case, it was found to be illegal.
The Department accepted that it was illegal to charge. We accepted the High Court's decision. So either the rest of the money will have to come from rates or Government grant, or legislation will have to be brought in to make the charges. They cannot be made now. Something will have to be done. The cost in Worcestershire is about £100, 000. Only £10, 000 has come in in voluntary amounts. So there is a loss of about £90, 000. There is also the threat that, if it is illegal to charge for this, it is illegal to charge for many other services in schools throughout the country—payments which have been paid willingly by most parents until this happened. I know that there is an attempt to set up a trust in the area to get round the matter, but share my hon. Friends' concern about the judgment, which has not helped Worcestershire.

Mr. Peter Temple-Morris: I am glad to hear my hon. Friend express those sentiments, and we appreciate the problem, which was expressed, in particular, by my hon. Friend the Member for Worcestershire, South (Mr. Spicer) about a year ago, The demand then for legislation, which is the necessary correction, is a matter for my hon. Friend and his Department. Can he say when action will be taken, instead of merely sympathising with the problem?

Dr. Boyson: I cannot say. I cannot foretell what will be in the Queen's Speech. However, I can pass on the sentiments that have been expressed here to the Secretary of State, and I shall do that tomorrow.
I want finally to mention some matters that have been done very, well by the county authority. There has been a decrease in the pupil-teacher ratio over recent years. The primary school pupil-teacher ratio in 1977–78 was 24·7, and it dropped to 23·9 last year. In secondary schools over the same years, it dropped from 17·8 to 17·3. So there is no doubt that the local education authority has tried to give a good service. Then there is the number of pupils

obtaining five 0-levels. The average for England in 1978–79 was 20·6 per cent. of pupils who obtained five or more O-levels, whereas in this county it was 23·3 per cent.—3 per cent. more.

The Question having been proposed after Ten o'clock and the debate having continued for half an hour, Mr. Deputy Speaker adjourned the House without Question put, pursuant to the Standing Order.

Adjourned accordingly at Seventeen minutes past one o' clock.